REG - Anpario PLC - Final Results
20/03/2024 07:00
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RNS Number : 4973H Anpario PLC 20 March 2024
Anpario plc
("Anpario", "Group" or the "Company")
Final results
Anpario plc (AIM: ANP), the independent manufacturer of natural sustainable
feed additives for animal health, nutrition and biosecurity is pleased to
announce its full year results for the twelve months to 31 December 2023.
Financial highlights
- 6% decrease in revenue to £31.0m (2022: £33.1m).
- Improvement in gross margins to 45.0% (2022: 42.7%).
- 14% decrease in adjusted EBITDA(1) to £4.5m (2022: £5.2m).
- 25% decrease in profit before tax to £2.8m (2022: £3.7m).
- Diluted adjusted earnings(1) per share down 8% to 15.31p (2022:
16.67p).
- Basic earnings per share down 16% to 13.51p (2022: 16.13p).
- Increase of proposed final dividend to 7.50p (2022: 7.35p) per
share, giving a total dividend for the year 10.7p (2022: 10.5p) per share.
- Cash generated from operations increased to £8.1m (2022:
£1.8m).
- Cash and bank deposit balances(2) of £10.6m at the year-end
(2022: £13.6m).
Operational highlights
- Sales growth in Middle East, South America and United States was
offset by decreases in other regions.
- Weighted average selling price increased due to a higher
value-add product mix and raw material cost recovery, contributing to an
improvement in gross margins.
- Strong sales growth of added value products Orego-Stim® and
Optomega® Algae.
- Indian partnership agreement for local blending of Orego-Stim®
to support sales growth.
- Grant of UK patent for our flagship toxin-binder product,
Anpro®.
- One of 148 organisations nationally to be recognised with the
first ever King's Award for Enterprise, with Anpario being one of fifteen
which received the award for Sustainable Development.
Outlook
- Strong start to trading in the current year.
- Increased volumes, cost reductions and efficiency improvements
expected to be fully realised in profitability measures in 2024.
- The industry and certain regions will continue to face specific
challenges.
- The Group's position as a leader in natural and sustainable feed
additive solutions combined with its geographic diversity and continued
structural industry movement towards natural and sustainable feed additive
solutions, gives the Board confidence in the long-term profitable development
of the company.
Matthew Robinson, Chairman of the Company, commented:
2023 was a challenging year for the global agricultural industry and Anpario's
results reflect this. These challenges arose not only from energy,
agricultural commodity and specific raw material prices, but also because many
in the animal nutrition sector started 2023 with excessive stock levels,
leading to de-stocking over the year.
The Group took some tough decisions during the period to reduce costs and
improve margins in response to these challenges.
The final quarter of 2023 delivered a welcome improvement in sales volumes and
gross margins that has continued into 2024, suggesting both that the global
situation is improving and that management's actions to improve margins are
delivering results.
Cash generation from operations was strong at £8.1 million (2022: £1.8m)
driven by working capital reductions following on from reduced supply chain
and logistics risks.
Anpario's balance sheet remains strong with year-end cash of £10.6m (2022:
£13.6m), after returning in aggregate £10.8m to shareholders in the year by
way of the Tender Offer and dividends (2022: £2.2m).
(1) Adjusted EBITDA and adjusted earnings are defined in note 6 of the
financial statements.
(2) Cash and bank deposit balances include amounts shown as short-term
investments in the statement of financial position, these are deposit accounts
with notice periods of more than three but less than six months which can be
accessed instantly at the penalty of lost interest, see note 20 of the
financial statements.
Enquiries
Anpario plc
Richard Edwards, Chief Executive Officer +44(0)7776 417 129
Marc Wilson, Group Finance Director +44(0)1909 537 380
Shore Capital
(Nominated Adviser and Broker) +44 (0) 20 7408 4090
Stephane Auton Corporate Advisory
David Coaten
Tom Knibbs
Henry Willcocks Corporate Broking
Chairman's statement
Overview
Anpario reports its revenue and profit performance during a challenging year
for the global agricultural industry. Sales were £31.0m, a 6% decrease on the
previous year (2022: £33.1m) but gross margins improved to 45.0% (2022:
42.7%) due to an increase in weighted average selling prices, some respite
from raw material price inflation and internal efficiency improvements,
resulting in Adjusted EBITDA of £4.5m (2022: £5.2m). Profit before tax
declined 25% to £2.8m (2022: £3.7m), further impacted by a £0.4m impairment
of the carrying value of R&D intangibles. The final quarter of 2023
delivered a welcome improvement in sales volumes and gross margins that has
continued into 2024.
2023 saw a series of global events which affected energy, agricultural
commodity and specific raw material prices. Meat protein producers experienced
significant margin pressure combined with lower consumption and heightened
competition. These conditions led to a reduction in the use of speciality feed
additives as producers looked to reduce input costs. Together with the
market's excess opening inventory, built up during 2022's supply chain issues,
overall volumes for Anpario's products suffered. There are still some
challenges to navigate, not least those territories still affected by disease
outbreaks, such as avian influenza and African swine fever (ASF), and the
financial pressures on producers due to subdued meat protein consumption.
However, Anpario's resilience is borne from its geographic and species
diversity.
The Group took some very tough decisions during the period to reduce costs and
improve margins. These included sensitive sales price increases and a cost
reduction programme in staffing and administrative expenses which, combined
with the investment into automation in our production facility, have improved
efficiency at lower volume levels.
Cash generation in the period has been strong. Like much of the sector we have
been able to normalise our global inventory contributing to cash generation
from operations increasing to £8.1 million for the year (2022: £1.8m),
comprising operating cash flow of £4.4m (2022: £5.4m) and a reduction in
working capital of £3.7m (2022: increase of £3.6m).
Our strong balance sheet and cash generative qualities enabled Anpario to
return £9.0 million in cash to shareholders by way of the Tender Offer which
completed in July 2023. We propose an increase in the final dividend to 7.50p
(2022: 7.35p) per share, bringing the total dividend for the year to 10.7p
(2022: 10.5p) per share, subject to shareholder approval at the Annual General
Meeting (AGM). In total, Anpario returned £10.8m to shareholders in 2023
(2022: £2.2m) whilst still leaving year end cash balances at £10.6m (2022:
£13.6m).
The first three quarters of the year were very tough with lower volumes in the
relatively competitive product markets of acid-based eubiotics and mycotoxin
binders, in contrast to increases in sales of phytogenic and omega products,
which are positioned at the higher value-add end of our range. Regionally the
Middle East & Africa, United States and South America delivered modest
sales growth, but this was offset by sales declines in all other regions.
Orego-Stim® and our recently launched Optomega Algae® omega 3 product
delivered strong sales growth in several territories including Brazil, Latin
America and the Middle East. pHorce®, our anti-viral feed mitigant product,
continued to deliver good growth. Outside of these three product lines the
rest of our portfolio suffered from decreases in volumes as producers looked
to reduce costs in response to input price pressures and declining meat
protein consumption. Encouragingly, the last three months of 2023 delivered an
increase in demand across a broader range of products.
Our business development activities continue to strengthen our sales channels
enabling us to expand market share in key growth territories of the future. We
were delighted to sign a new agreement with our Indian partner who has
successfully represented Orego-Stim® since 2008. The agreement means
Orego-Stim® will be blended and packaged locally under licence, helping to
speed up sales growth and offer greater access to new market segments.
Orego-Stim® is recognised as a leading phytogenic product in India and this
enhanced partnership offers more sales opportunities in one of the world's
fastest growing agriculture and aquaculture markets. We have also recently
appointed a distributor for Canada.
We continue to invest in our technologies with several scientific trials and
new product development initiatives, including Orego-Stim® Forte, a
water-soluble presentation containing several natural plant extracts, which
has recently achieved initial sales in the aquaculture market, but can equally
be applied in other species markets.
Attaining the UK patent for our flagship mycotoxin-binder product, Anpro®, is
in line with our strategy to maximise returns on our research and development
activities by providing a tax benefit to the Group via the UK Patent Box
scheme in addition to enhancing the marketability of our products on a global
basis. We now have two product technologies covered by this scheme which
account for a significant part of the Group's earnings.
Environmental, Social and Governance (ESG)
Our position as the leading natural and sustainable animal feed additive
solutions provider, continually looking to improve our processes, packaging,
waste, and impact on the environment was justly rewarded with being one of 148
organisations nationally to be recognised with the first ever King's Award for
Enterprise, with Anpario being one of fifteen which received the award for
Sustainable Development. We are very proud of this achievement which
demonstrates how our culture of continual improvement in how we do things not
only supports the Group's financial performance but also reduces the impact of
our activities on the planet both directly and by offering environmentally
friendly and sustainable solutions in support of global agriculture and
aquaculture which is important to so many communities around the world.
These efforts have resulted in a reduction in our total Scope 1 and 2
greenhouse gas emissions, measured in tonnes of CO(2) equivalent, from 77.3 in
2022 to 46.6 in 2023 which, looking at tonnes of CO(2) equivalent per
£'million of turnover, represents a reduction in intensity of 35%. This
excellent outcome has been achieved through a combination of our in-house
solar panels, amended working practices and better performance by our external
energy suppliers.
2023 also saw Anpario's accreditation to membership of SEDEX (the Supplier
Ethical Data Exchange) giving supplier chain transparency on a global
platform.
People
This has been a year of tough and challenging conditions for our staff to
navigate across the globe but, as always, they have shown great resilience,
professionalism, and ingenuity in supporting our customers and delivering on
actions to secure the long-term profitable growth of Anpario. I thank them for
their continued loyalty and commitment in all aspects of the business which is
exemplified through receiving recognition such as the King's Award for
Enterprise.
Board
In August 2023, we were very pleased to welcome Tim Pollock to the Board as
non-executive Director, following Kate Allum's resignation in June 2023. Tim
has an extensive track record at executive director level in agriculture,
animal nutrition, soft commodities and the food ingredient sector as well as
public company markets experience. We thank Kate for the contribution she made
as Chairman of the Board including for her contribution to the development of
the Group's ESG initiatives. The board now comprises two independent
non-executive and three executive directors and this composition will be kept
under review in light of QCA guidelines.
Dividend
The Board will be recommending at the forthcoming AGM a final dividend of
7.50 pence per share (2022: 7.35 pence) making a total of 10.7 pence per share
for the year (2022: 10.5 pence), an increase of 2%. This dividend, payable on
26 July 2024 to shareholders on the register on 12 July 2024 (ex-dividend date
of 11 July 2024), reflects the Board's continued confidence in the prospects
for the Group and its ability to generate strong cashflows.
AGM
The Board plans to hold the AGM in London on Tuesday 25 June 2024, at 11.00am.
We recognise that the AGM is a good opportunity for shareholders to meet and
ask questions of the Board. We will let shareholders know nearer the time the
arrangements for the AGM.
Outlook
The year has started well continuing from the final quarter of last year. The
combination of improving gross margins, increased volumes and a focus on
overhead costs are expected to deliver an improved operating performance. Some
of the challenges across the global agriculture industry have abated but we
are mindful that new ones, such as the Red Sea issues and subdued meat protein
consumption due to a higher cost of living, have heightened competition for
our customers and will impact further progress in some areas. We expect
individual territory performance to be variable and dependent on local
economics but one of the Group's strengths is the breadth and diversity of its
global client base.
Our business development initiatives are focused on increasing market share in
both the ruminant and aquaculture sectors where we have several new products
offering significant returns on investment for producers whilst also
supporting them to meet their environmental and sustainability obligations. We
continue to concentrate on key growth territories by establishing stronger
sales channels and partnerships, which allow us to present Anpario's value
proposition directly to the end customer.
Our strong balance sheet and cash generation allows us to continue to invest
in innovative natural feed additive solutions, strengthen our sales and
distribution channels to drive organic growth, supplemented with complementary
acquisition opportunities which may arise.
Matthew Robinson
Chairman
20 March 2024
Chief Executive Officer's statement
Overview of the financial year
Group sales for the year to 31 December 2023 declined by 6% to £31.0m (2022:
£33.1m) with modest sales growth limited to Middle East & Africa (MEA),
United States (US) and South America. However, this growth was offset by
significant decreases in Europe, Asia Pacific including China and Latin
America which declined by 11%, 10% and 29% respectively. Asia Pacific is our
biggest region accounting for more than a third of Group sales, whereas Europe
and Latin America account for just over a fifth and less than a tenth of Group
sales respectively. The product groups exposed to price competition such as
acid-based eubiotics, mycotoxin binders and antioxidants, particularly in the
Asia Pacific region, experienced larger volume decreases than our added value
product range with a decline in sales of 23% compared to the same period last
year.
Our higher value differentiated product brands Orego-Stim®, pHorce® and
Optomega® Algae delivered combined sales growth of 15%, accounting for over
half of Group sales. Overall, our product volumes declined by 23% compared to
the same period last year, largely due to reduced sales from lower value-added
price sensitive products, but these volume declines were tempered by an
increase in the weighted average selling price of 23% as the full effect of
price increases started to feed through.
The decrease in gross profit was narrowed to just 1% to £14.0m (2022:
£14.1m) for the year to 31 December 2023 due to the early implementation of
price rises combined with the decline in raw material and logistics costs
during the period. Also, having worked through most of our high inventory
levels, the cost of goods sold is now benefitting from lower raw material
prices. We expect further improvement from operational efficiencies should
production volumes continue to increase reflecting the Company's high
operational gearing. The investment in our factory automation in recent years
including last year's £200,000 automated palletiser capital expenditure has
helped to increase productivity such that our operations team are achieving
higher volumes per shift, thereby increasing overall capacity at our Manton
Wood facility.
Orego-Stim® continues to perform well with sales increasing by 12% on volume
increases of 18%. During the period, Orego-Stim® was successfully launched in
the US to the young cattle market for inclusion in calf milk delivering better
performing calves. This leading phytogenic product also delivered strong
growth in the Middle East, South America and Asia Pacific including China. Our
recent development of a water-soluble version using several natural phytogenic
compounds is showing early promise in commercial aquaculture trials.
Specifically designed for use in feed or on farm, to defend against infectious
pathogens, trials are showing a significant reduction in mortality in the
absence of antibiotics as well as other productivity improvements. It is
therefore pleasing to have recently achieved initial sales with Orego-Stim®
Forte and we look forward to more success and demonstrating its application in
other species.
It was clear at the beginning of the period that 2023 was going to be very
challenging with pressure on producers in terms of their margins and reduced
meat consumption as consumers reined in their expenditure to cope with the
increase in the cost of living. Producers also cut back loss making operations
which led to a reduction in overall demand for speciality animal feed
additives, resulting in increased price competition between additive
suppliers. High inventory levels at all points along the supply chain only
served to make the situation worse. As such it was necessary to implement some
cost reductions measures which unfortunately included reducing headcount in
several areas.
Our higher value-add differentiated products held up well during the period
and points the way to ensuring we continue to develop high quality feed
additive solutions which bring a proven return on investment for the customer.
Building strong global brands helps to build loyalty and recognition with
customers giving them the confidence to use our products in their operations.
In addition, we have expanded and strengthened our sales and distribution
channels with initiatives such as the India partnership agreement and have a
direct end customer relationship supported by our new customer relationship
management (CRM) system, which is currently being implemented across a number
of regions in a phased approach.
It was encouraging to see the increase in sales in the final quarter of last
year which has continued into this year. Our focus is to build on this
momentum by targeting those territories and species markets which will
experience improved prospects in the future. Several challenges do remain not
least geopolitical events in Ukraine and the Middle East and pressure on
producers from input costs and subdued meat protein demand. However, we are
confident of finding opportunities to exploit to help drive the business
forward.
Operational review
Americas
Overall, sales across the segment were slightly down at minus 1% compared to
the same period last year, although South America and the United States
delivered growth of 28% and 4% respectively. Within the South America region,
Brazil achieved sales growth of 31% helped by sales of Orego-Stim® to poultry
integrators boosted by a strong export trade to both Europe and Asia, which
helped Brazil to post a record year for chicken product exports. There was
limited impact in Brazil from the high pathogenic avian influenza (HPAI) that
we highlighted at the half year with no reported outbreaks on a commercial
poultry farm unlike the United States and several other countries where
millions of birds required culling to prevent contagion.
Venezuela is a new territory for the Group but has quickly made a good sales
contribution to the South America region. Unfortunately, the foreign currency
restrictions imposed by the Argentinian government made trading conditions
very difficult for our long-term distributor culminating in a decrease in
sales of 34% compared to the same period last year.
Volume growth in the United States increased by 14% driven by pHorce® and
Orego-Stim® but sales growth was pared back to 4% due to a reduction in
average selling prices influenced by a change in product mix within the
Orego-Stim® range. The swine industry was challenged during the period with
lower export demand to China and weak pork prices which meant producers were
typically at break-even levels at best.
Our move into the young cattle market was therefore timely where Orego-Stim®
is included in calf milk delivering healthier better performing calves. We are
supporting this initiative with the recruitment of additional account managers
and local University trials looking at the effect of Orego-Stim® on
cryptosporidia and coccidiosis in pre and post weaned calves with an estimated
cost to the US calf industry of $76 million and $100 million respectively.
These infections are currently managed by electrolytes or certain antibiotics,
the latter unable to be used in organic systems and so we believe that
Orego-Stim® could be a more effective natural alternative in both cases. We
also recently launched a combination product to our US dairy customers where
we have combined our Anpro® mycotoxin binder with Orego-Stim®. This new
version to our product range offers enhanced differentiation against
competitor products bringing a number of combined benefits to the farmer.
We recently appointed a distributor for Canada whose initial focus is to
register pHorce® for sales in the territory, as Canada has followed the EU by
capping the levels at which zinc oxide (ZnO) can be used in piglet diets. We
already have trials to prove the efficacy of pHorce® for this purpose.
Latin America which accounted for just over a third of the Americas sales had
the biggest impact on the segment with a decrease of 29% compared to the same
period last year. Although Honduras and Mexico experienced material decreases
in sales, the biggest impact was down to our Ecuador distributor which was
financially limited in the level of business they could transact with us
resulting in sales declining by 75%, particularly affecting our Mastercube™
pellet binder business which delivered significant growth in 2022. As a
result, we are working on a solution with our distributor where Anpario would
directly invoice the larger end customers to both spread the risk and take
advantage of stronger credit terms.
The Americas is a key segment because with cheaper energy and locally grown
raw materials animal feed producers have a clear global advantage in supplying
low-cost meat protein products to regions including Europe and South-East
Asia. The Middle East would also be included as an importing region, but local
authorities view food security as a basic need and so are investing and
encouraging their industry to build up capacity.
Asia
The segment, which includes Australasia, China and South-East Asia which
accounted for 37% of Group sales delivered a weak sales performance with a
decline of 10%. Much of this decline was from the South-East Asia region with
sales decreasing by 16% compared to the same period last year. China sales
decreased by just 2%. There were some positive performances from Australasia,
Malaysia and Indonesia with sales growth of 2%, 18% and 25% respectively.
Malaysia is particularly pleasing as at the half year sales were significantly
behind the prior year period, which demonstrates how some territories and
customers can effect a quick turnaround if the conditions are favourable. In
Malaysia's case, the government are supporting the egg industry with subsidies
and the reduction in animal feed costs has improved the economics for local
producers. Reassuringly, avian influenza has had no lasting impact on the
industry.
Although South Korea and Thailand experienced sales declines of 29% and 11%
due to tough conditions for producers and general high inventory levels in the
supply chain it was the Philippines which suffered the most; effectively
contributing to the total decline in sales at over £1 million for the whole
segment. We have several Philippines distributors and some direct business to
end customers. The territory has been severely affected by African swine fever
(ASF) leading to a smaller pig industry which must also compete with imports
from some of the largest pork exporting nations such as Brazil and the US. The
feed additive products impacted the most were at the more price sensitive end
of our range of mycotoxin binders and antioxidants, the latter being
susceptible to cheaper imports from China using harmful substances such as
ethoxyquin. We have seen some improvement in volumes in the Philippines since
the year end.
Again, China accounted for 13% of Group sales during the period and, although
volumes declined by 33%, sales only decreased by 2% because the average
selling price increased due to Orego-Stim® sales increasing by 17% in the
territory. Product volumes which suffered were acid-based eubiotics and
mycotoxin binders in a country which has local manufacturing of these products
and a local industry which is under severe pressure to find growth in reduced
demand. The swine industry is undergoing structural changes and as such our
team is redirecting efforts into other species sectors with support from the
wider Group.
Our aquaculture interests in the region are mainly focused in Thailand and
Vietnam where some major shrimp integrators have been undertaking commercial
trials with Orego-Stim® Forte for a range of applications including parasite
control, white faces syndrome, and amoebic gill disease (AGD) in addition to
productivity gains such as growth rate and reductions in mortality. Initial
trials have been successful with positive feedback from customers. There are
also commercial aquaculture feed trials happening with Mastercube®, our
natural pellet binder.
Overall, the segment has had a stronger start to the year with some of the
poor performers last year beginning to grow again.
The Middle East, Africa and India
Encouragingly the Middle East delivered sales growth of 1% against a backdrop
of some tough challenges in the region including foreign currency restrictions
in certain territories. The sales team continues to focus on selling higher
value add products such that the weighted average selling prices increased by
39% compared to the same period last year. This overall increase helped offset
sales declines in Egypt, Iran and Pakistan of 29%, 100% and 91% respectively,
all small revenue generating territories for the Group, which were impacted by
our customers' not being able to easily secure foreign currency for payment.
Saudi Arabia also experienced a 51% decline in sales due in line with our
decision to switch focus on higher value-added products and forgo competitive
tender processes.
There were strong performances in India and the United Arab Emirates with
sales growth of 31% and 121% respectively. Furthermore, we won new business in
Oman and Lebanon which the Group didn't have in the previous period. The
recently signed Indian partnership agreement is expected to deliver further
growth of Orego-Stim® and we are additionally in discussions to expand the
relationship in some of our other product groups to help further expand our
market potential, which may include a number of African countries where our
partner already has a presence.
Europe
Overall sales and volumes declined 11% and 19% respectively compared to the
same period last year. Approximately half of this decrease in sales was due to
the loss of the UK feed hygiene customer which we were still supplying in the
first quarter of 2022. In addition, sales reduced to a UK poultry customer
that was affected by high pathogenic avian influenza (HPAI) which resulted in
a reduction of output and pressures on the cost of production. The other two
territories with particularly weak performances were Austria and Israel with
sales declines 23% and 22% respectively. The weighted average selling price
across the segment increased by 11%.
There were good sales performances from Italy and the Czech Republic with
growth of 28% and 107% respectively. Spain, Poland and the Baltic States also
continued to deliver positive performances helped by incremental improvements
in pork prices across the region which led to a temporary rebound of slaughter
in the second half of the period. However, overall pork production continues
to decline across Europe with the European Commission forecasting a continued
decline into 2024 because of the absence of a full recovery in Chinese demand
due to economic slowdown. The European pig sector also faces dwindling
domestic demand as consumers show a preference for poultry over pork.
Poultry and egg production had more positive experiences across Europe due to
modestly increasing demand and better prices. However, in terms of feed
volumes, overall compound feed declined by about 2% across the European Union
in 2023 due to weak swine and cattle markets. The Group has a stronger
presence in the poultry sector but equally it is important to diversify our
technology into other species sectors including ruminant, aquaculture and pet.
Mastercube®, our 100% natural pellet binder, has been adopted by a European
dog food manufacturer following extensive factory trials over a long period.
Our sales team are cognisant that there are other similar opportunities in
this sector and are actively pursuing these. We were also pleased to receive a
European Union complementary feed license through our Irish subsidiary which
now means we can market products such as Orego-Stim® liquid directly to vet
practises in the region.
Overall, the business across Europe is moderately improving through a
combination of better economics for producers and our own initiatives. In
overview there were essentially just two countries across the Group's global
network which impacted our sales performance significantly, namely the
Philippines and Ecuador where combined sales declined by just under £2
million. Action is underway to address the weaknesses in our sales structures
in these countries to ensure we can mitigate any similar future challenges.
Innovation and development
Our development projects are typically focused on demonstrating the efficacy
of our existing technology in new applications or species. Orego-Stim® is a
pure and 100% natural oregano essential oil with many compounds which bring
numerous potential multi-factorial benefits to animal health and explains why
it has both antimicrobial and parasiticidal properties to name two
applications. We can also enhance some of the effects and characteristics by
combining with other natural plant extract compounds and manufacture using
specialised techniques to produce unique solutions such as the recently
launched Orego-Stim® Forte, which in commercial trials with major aquaculture
companies has demonstrated success outcomes. Orego-Stim® Forte is being
trialled across several aquatic species including shrimp, salmon, pangasius
and barramundi in commercial operations.
Anpario's original technology was a novel chemosensory stimulant for fish and
crustacea which enhanced palatability improving the uptake of aquafeed,
reducing waste, and thereby helping to protect the aquatic environment. In
addition to improving the productivity and financial returns for fish farmers
it also has the benefit of allowing more sustainable forms of protein to be
used thereby reducing the reliance on fishmeal sourced from wild fish stocks
to support aquaculture production.
This technology was originally branded as Aquatice® but commercialisation was
halted about ten years ago due to several factors, one being that at the time
fish meal was still being included in formulations in high quantities and
therefore palatability was not so much of an issue. Secondly, Aquatice® was
only available in liquid form which means it needed to be applied at farm
level rather than in the feed which is a much simpler method of delivery. In
short, we believe the Aquatice® technology was before its time and now with
the industry focused on using sustainable feeds such as vegetable or
insect-based protein that there is a potential opportunity for Aquatice® to
be commercialised. During the last year we therefore developed a powder
version for use in feed and adjusted the formulation to suit current
regulations. A shrimp trial is planned for later in the year with a global
aquafeed producer.
Growth Strategy
We continue to expand and strengthen our global sales channels by recruiting
local sales and technical teams because being close to the end customer is the
best long-term driver for organic growth. We have already established a good
network of local subsidiaries in key markets and building a greater presence
by increasing our sales resource is a priority which will be supported by our
customer relationship management system (CRM) currently being rolled out
across the Group.
A proportion of our weak performance during the period can be attributed to
difficult conditions in monogastric (poultry and swine) species, which
accounts for a significant part of the business. Therefore, it is crucial that
we implement specific initiatives to grow our presence in the ruminant,
aquaculture and pet sectors, which we are doing.
Our strategy to develop and market strong branded products with high efficacy
delivering consistent results and return on investment for our customers means
that we will keep investing in marketing trials and product development to
broaden the appeal of our products. We will continue to position the Group as
the leading natural and sustainable animal feed additive solutions provider
and deliver this strategy through a combination of internal development,
supplemented with complementary acquisition opportunities, the pursuit of
which will remain a priority for the Group where we can play a role in
consolidating a fragmented market to enhance shareholder returns through
operational synergies and expanding our product, species and geographic
portfolio.
Richard Edwards
Chief Executive Officer
20 March 2024
Key performance indicators
Financial
2023 2022
Note £000 £000 change % change
Revenue 3 30,998 33,103 -2,105 -6%
Gross profit 13,958 14,136 -178 -1%
Gross margin 45.0% 42.7% +2.3%
Adjusted EBITDA 6 4,463 5,208 -745 -14%
Profit before tax 2,753 3,681 -928 -25%
Basic earnings per share 12 13.51p 16.13p -2.62p -16%
Diluted adjusted earnings per share 12 15.31p 16.67p -1.36p -8%
Total dividend for the year 11 10.70p(1) 10.50p +0.20p +2%
Cash balances and short-term investments 20 10,649 13,567 -2,918 -22%
Net assets 33,649 41,311 -7,662 -19%
(1) Includes both the interim dividend paid during the year and the proposed
final dividend which is subject to approval by the shareholders at the AGM.
Non-financial
2023 2022 change % change
GHG emissions(1) (tCO(2e)) 46.6 77.3 -30.7 -40%
Carbon intensity(1) (tCO(2e) per £m sales) 1.5 2.3 -0.8 -35%
Major accidents reportable to the Board nil nil
(1) Scope 1 and 2 Carbon emissions and defined by the GHG protocol, for more
information see the environment and social responsibility report.
Anpario have begun to monitor and report on Scope 1 and 2 carbon emissions as
part of its goal to achieve net-zero carbon emissions by 2030. As such we
track two related performance indicators, total GHG emissions and carbon
intensity. Anpario is expected to grow as a Company and as a result total
carbon emissions may increase, as such our carbon intensity, defined as carbon
emissions divided by sales, will be a key measure in tracking our progress
towards our net-zero goals.
The Group also regards growth of business in key target markets and the
on-going achievement of product registrations and quality assurance
accreditations as other KPIs.
Financial review
Revenue and gross profits
Performance through the second half of the year was more consistent and
stronger than through the first, with revenue increasing by £0.5m (3%) and a
gross margin improvement to 46.2% (H1 2023: 43.9%), resulting in gross profits
of £7.3m (H1 2023: £6.7m) for this period.
On a full year basis, revenue declined by 6% to £31.0m (2022: £33.1m), a
reflection of the continued difficult market conditions experienced through
the year, albeit with signs of improved stability and growth through the
second half. Asia and Europe suffered the most, experiencing a 10% and 11%
decline respectively, the Americas were down 1% with MEA up by 1% on prior
year. A full analysis of the sales performance is included in the Chief
Executive Officer Statement.
In terms of product performance, growth was seen in our market leading
products of Orego-Stim™, pHorce™ and Optomega™, which collectively grew
revenues by 15% and now represent a combined 54% of sales. As highlighted in
the interim statement the more competitive product segments such as our
Binders and some of the Acid-based Eubiotic range contributed to all of the
volume decline and more than all of the revenue reduction. These reductions
are a result of a combination of both lower demand due to reduced levels of
meat production and price pressures leading some producers to switch to lower
quality and cheaper alternatives. The Acid-based Eubiotic range has in recent
years been most acutely affected by input price pressures, the raw materials
for which have now steadily been reducing in cost but remain at materially
high levels that affect demand.
Full-year gross margins improved to 45.0% (2022: 42.7%) albeit, due to the
lower sales level, gross profits saw a slight decline by 1% to £14.0m (2022:
£14.1m). Input costs overall have stabilised, with some reductions seen
through the year, albeit still with historically high organic acid prices.
This, alongside the change in sales mix towards more premium positioned
products such as Orego-Stim™, have been the drivers for the improvement in
gross margins, up to 46.2% through the second half of the year as previously
stated.
Research and development impairment
As part of regular review processes, a £0.4m impairment of research and
development expenditure was identified in the year. This relates to several
projects which, whilst demonstrating positive results, would have required
further investment and a decision was made to halt work on these initiatives.
Due to the exceptional and non-recurring nature of this expense it has been
excluded from our alternative performance measures.
Administrative expenses
Administrative expenses were 8% higher at £11.4m (2022: £10.6m). However,
this £0.8m increase includes the aforementioned R&D impairment of £0.4m,
as well foreign exchange charge of £0.3m (2022: nil), higher expected credit
loss provisions of £0.1m (2022: nil) and a lower level of capitalisation of
employment costs, down by £0.2m to £0.2m (2022: £0.4m). Excluding these
items, core administrative costs were 2% lower at £10.8m (2022: £11.0m)
despite a general level of high inflation in the macroeconomic environment.
The inflationary pressures and reduced profitability have led to a greater
focus and emphasis on optimising expenditure and operating more efficiently
and the hard work and efforts by staff in this regard have been greatly
appreciated. However, despite these efforts it has been necessary to implement
a restructuring and redundancy process and we have regrettably needed to
reduce headcount and external resource in several areas of the business to
right-size the operations for the current reduced volumes and levels of
profitability. This process was concluded in the year by the end of Q3.
Employment costs, excluding R&D staff capitalisation, decreased by 5%
(£0.4m) in the year, as a result of a part-year reduction from the redundancy
and restructuring exercise, though offset by inflationary wage increases.
Travel costs increased by 9% (£0.1m) due mainly to inflationary pressures.
Taxation
Corporation tax is calculated at 23.5% (2022: 19.0%) of the estimated
assessable profit for the year. The UK government announced on 3 March 2021
that the government are intending to increase the corporation tax rate from
19% to 25% from April 2023.
As previously announced, Anpario was recently granted another UK patent, this
time for our flagship toxin-binder product, Anpro™. This is expected to
attract tax benefits, alongside those already in place for Orego-Stim™, via
the UK Patent Box Scheme which allows companies to apply a lower rate of
corporation tax to profits attributable to qualifying patents.
IFRS accounting standards require tax to be recognised on the most likely
outcome, but as with all tax items, Her Majesty's Revenue and Customs (HMRC)
reserves the right to query the Company's calculations. Work has continued
with our tax and patent advisors on the matter. The directors consider the
acceptance of our Patent Box tax computations to be more likely than not and
as such we expect a material reduction in UK Corporation Tax because of the
Patent Box application. Following the grant of patent then we are able to
apply this benefit back to the original application in June 2021 and as such
there is a related prior year tax reduction of £0.1m.
The total benefit through Patent Box for the year was £0.3m (2022: £0.2m),
the amount in future periods will depend on several factors, including the
number of sales attributable to the patent in any given year, any changes
relating to the Patent Box Scheme and the prevailing tax rates at the time.
The effective tax rate for the year was 8.2% (2022: 10.3%). However, excluding
the prior year tax benefit from Patent Box the underlying effective tax rate
for the year was higher at 12.9% (2022: 10.3%), reflecting the increase in the
corporation tax rate.
Tender offer
In July 2023, Anpario completed a £9.0m Tender Offer to purchase its own
shares at a price of 225p per ordinary share. Following the conclusion of the
Tender Offer, the 4,000,000 shares repurchased, together with a further
440,388 shares that were already held in Treasury were subsequently cancelled.
As the reduction in shares occurred in July 2023, part way through the year,
then the time-weighted average shares in issue is lower for 2023, as detailed
in note 12 to the financial statements, with a larger full-year reduction
impact expected for 2024.
Profitability and earnings per share
As a result of the above factors, Adjusted EBITDA for the year decreased by
14% to £4.5m (2022: £5.2m) and diluted adjusted earnings per share,
benefitting from the reduced number of shares in issue, fell by a smaller 8%
to 15.31p per share (2022: 16.67p).
Profit before tax fell by 25% to £2.8m (2022: £3.7m). Basic earnings per
share fell by 16% to 13.51p (2022: 16.13p).
Cash flows and balances
Operating cash flows before changes in working capital reduced to £4.4m
(2022: £5.4m), mirroring the fall in operating profit for the year. However,
offsetting this reduction there was a £3.7m release into cash through reduced
working capital levels, compared with a prior year absorption of £3.6m. The
reduction in working capital came primarily through a decrease in inventory of
£3.3m. Which reverses successive years of increases in both raw material and
finished goods levels, held high to counter supply chain risks and logistics
delays. Combined, these factors led to a significant improvement in cash
generated from operations to £8.1m (2022: £1.8m).
The corporation tax debtor at the end of the prior year was repaid in the
current year. This related in part to overpayments made in advance and
primarily the application and catch up of the Patent Box scheme tax deductions
for the Orego-Stim patent. As such, a net tax refund of £0.6m was received,
compared with payments last year of £0.7m.
Excluding the movement in short-term investments, which relate to cash held on
deposit for greater than three months and less than six months, then net cash
used in investing activities was down to £0.5m (2022: £1.4m). This is a
result of lower capital expenditure, with £0.3m (2022: £0.8m) on purchases
of property, plant and equipment, as well as a decline in payments to acquire
intangible assets to £0.5m (2022: £0.7m). In addition, as a result higher
Bank of England base rates then interest received increased to £0.2m (2022:
£0.1m).
The Tender Offer already mentioned expended £9.2m of cash, including
transactions costs. Due to the reduced number of shares in issue, the Tender
Offer reduced the outflow of cash related to dividends by £0.4m to £1.8m
(2022: £2.2m), despite a continued increase in the amount paid per share. The
total net cash used in financing activities was £11.0m (2022: £2.0m).
Overall, after returning a total of £10.8m to shareholders in the year
through the Tender Offer and by way of dividends, the total cash, cash
equivalents and short-term investments fell by only £3.0m to £10.6m (2022:
£13.6m). The primary purpose of holding these resources is to fund future
acquisitions and we continue to explore suitable opportunities.
Dividends
The Board is recommending a final dividend of 7.50 pence per share (2022:
7.35 pence) payable on 26 July 2024 to shareholders on the register on 12 July
2024 (ex-dividend date of 11 July 2024). In addition to the interim dividend
already paid, this represents an increase to the total dividend for the year
of 2% to 10.7 pence per share (2022: 10.5 pence).
Marc Wilson
Group Finance Director
20 March 2024
Our business model and strategy
Business model
Anpario is an independent manufacturer of natural sustainable animal feed
additives for health, nutrition and biosecurity. Our products work in harmony
with the natural aspects of the animal's biology and Anpario's expertise is
focused on intestinal and animal health, and utilising this understanding to
improve animal performance and customer profitability.
Anpario supplies its customers with quality assured products manufactured in
the United Kingdom and has an established global sales and distribution
network in over 70 countries.
Anpario was built up through a combination of acquisitions and organic growth
by establishing wholly owned subsidiaries in a number of key meat producing
countries. The portfolio of products has been developed with the customer and
the animal in mind, taking into account the life stages of the animal and the
periods when they will be more challenged.
Anpario is well positioned to benefit from the trends in growth of the
world's population, the increasing demand for meat and fish protein in
developing countries and the tightening of global regulation which favours
more natural feed additive solutions. Seizing these opportunities is how
Anpario intends to deliver long-term shareholder value.
Anpario acknowledges the challenges facing livestock producers in meeting
environment and sustainability targets. Anpario is contributing to the
research and development progress that the agricultural livestock industry is
achieving in improving its carbon footprint and GHG emissions. Anpario prides
itself on being a low carbon manufacturer of animal feed additives, with two
thirds of sales from products which can be described as from sustainable
sources and from non-carbon derived raw materials.
Our business model is based on:
Products High quality efficacious products presented well that meet the needs of our
customers both now and through changes in the regulatory environment.
Story Powerful value add proposition demonstrating the financial, performance and
sustainability benefits of our product solutions;
Quality Quality in both manufacturing processes and through the supply chain to
provide consistent products that perform in a reliable manner;
Branding Build an impeccable Anpario brand which global customers can trust as having
innovative, high quality and effective solutions for customers;
Channel Control the sales channel to ensure we develop strong technical and commercial
relationships with the end users of Anpario products.
Efficiency Efficient automated production and effective operations that can met the
service level requirements of our customers.
Sustainability Our natural products help to reduce our customers carbon footprint by
improving the animal feed conversion rates, and we also have a focus on
reducing our own environmental impact.
Strategy
Regional focus
Developing local commercial and technical relationships across the world.
Delivered through:
- regional sales structure;
- local language speakers;
- resource that understands local market needs and challenges; and
- closer relationships with key end customers.
Actions in 2023:
- rollout of a new CRM system to increase and improve customer
engagement and communication;
- collaboration with Indian partner to manufacture Orego-Stim locally to
provide greater market access.
- First direct and local sales in both Malaysia and Vietnam; and
- continued growth of direct sales channels.
Future plans:
- We now have operations and personnel in our key target markets, and as
such the focus now is on developing a stronger market position through
increased resource and presence in these territories.
Technical & products
Add value by developing products that help overcome the challenges of
modern-day farming.
Delivered through:
- scientific research and development, working closely with the end
customers' meat protein operations, to help improve gut function leading to
improved animal performance;
- support the producer through prevention rather than treatment; and
- help the customer meet disease and regulatory challenges.
Actions in 2023:
- took the decision to halt progress on several R&D initiatives, to
focus on higher priority projects;
- continued development of new applications and presentations of our
products to expand market opportunities, with £0.3m capitalised on these
projects in this year; and
- closer co-ordination of technical and marketing strategy to enhance
effectiveness and efficiency.
Future plans:
- continue to retain and recruit technical and animal production
experts;
- continued investment in research and development working closely with
key global customers and respected institutions; and
- look for product opportunities which broaden our range and species
opportunities.
Acquisitions
Growth through complementary and earnings enhancing acquisitions.
Delivered through:
- successful integration to derive both operational and financial
synergies;
- specific searches to identify suitable targets in the specialty feed
additive market; and
- applying strict acquisition and valuation criteria; targets must
either complement our current product range, offer market consolidation
opportunities, or strengthen our sales and distribution channels.
Actions in 2023:
- further discussed and reviewed the acquisition strategy as part of our
Strategic Review process; and
- engaged with, and evaluated, a number of other acquisition targets
through both formal and informal sale processes.
Future plans:
- continued active search for acquisition opportunities within defined
criteria.
Operations
High quality, consistent and efficient manufacturing.
Delivered through:
- further automation of production facilities;
- key industry quality accreditations; and
- quality supply partners.
Actions in 2023:
- installed an automated palletiser to reduce manual handling
requirements and increase automation;
- installation of dust recirculation system to reduce dust particles in
production environment and reduce waste; and
- enhanced quality control systems across a number of production lines.
Future plans:
- the programme of plant automation projects, first started in 2016, is
now largely complete, though we will continue to evaluate new potential
improvements to efficiency and automation.
Environmental, Social and Governance
Anpario seeks to ensure a sustainable future, conducting business in a
socially, ethically and environmentally responsible manner engaging with all
our key stakeholders, including the communities in which we operate.
Delivered through:
- our three-pillar framework, 'People; Planet; and Promise';
- robust governance structures appropriate for our business size; and
- engagement with our stakeholders.
Actions in 2023:
- membership of SEDEX (Supplier Ethical Data Exchange) giving supplier
chain transparency on a global platform.
- through various activities with employees, we raised money and
awareness for the staff chosen charity of the year, Dementia UK; and
- A further 36% reduction in Carbon intensity, representing a cumulative
reduction of 76% since 2019.
Future plans:
- continued evaluation of ways to reduce our carbon emissions;
- continue steps towards implementation of TCFD framework; and
- work with our staff chosen Charity of the year, Save the Children.
Section 172 Statement
Introduction
As a Board, collectively and as individual Directors, we recognise our
obligations and our duties as Directors. Section 172 of the Companies Act 2006
requires a director of a company to act in the way they consider, in good
faith, would be most likely to promote the success of the company for the
benefit of its members as a whole. In doing so, each Director has regard,
amongst other matters to:
- the likely consequences of any decision in the long term;
- the interests of the Company's employees;
- the need to foster the Company's business relationships with
suppliers, customers and others;
- the impact of the Company's operation on the community and the
environment;
- the desirability of the Company maintaining a reputation for
high standard of business conduct; and
- the need to act fairly as between members of the Company.
How the Board fulfils its Section 172 duties
We ensure that the requirements of section 172 are met and the interest of our
stakeholder groups are considered through, amongst other means, a combination
of the following:
- review of strategic objectives and achievement thereof;
- annual budgets and review of resource allocations;
- results presentations to shareholders and staff;
- audit and risk management processes conducted through the year;
- health and safety reports;
- reviews of employee matters;
- annual performance appraisals for all staff including personal
development reviews;
- consideration of these matters in relation to major decisions
made within the year;
- regular meetings with customers and key suppliers; and
- other ad-hoc engagement with stakeholders.
Stakeholders and their key interests
The table below outlines the key stakeholders the Company has identified,
their key interests and where in this annual report that further details on
matters such as engagement and key decisions made in the year in relation to
each stakeholder group can be found.
Shareholders
Anpario recognises the importance of engaging with existing and potential
investors to understand their views and objectives. This can enhance strategic
and governance decision making processes of the Board. We welcome investor
contact and those wishing to engage with us can email on investor@anpario.com.
Key interests
- Delivering sustainable, profitable growth over the long-term.
- Robust governance and appropriate controls to mitigate risk.
- ESG initiatives and responsible management practices.
Key actions and decisions in the year relevant to this stakeholder group
- Increase in dividend per share proposed (see Chairman's statement).
- Completion of a Tender-Offer to return £9m to shareholders by
purchasing 4m shares.
- Cancellation of shares purchased through the Tender offer and existing
treasury shares.
- Held the 2023 AGM at our headquarters in the UK and gave shareholders
who attended a tour of the production facilities and recent capital
investments.
Customers
Anpario values our customers and has extensive long-term relationships across
the world. Our network of local and regional account management teams are in
place to understand the needs and challenges faced by our customers so that we
as a Group can deliver the product and service solutions that they require.
Key interests
- Innovative, high-quality products that help overcome the challenges of
modern-day farming.
- Reliable logistics networks with good stock availability and timely
delivery.
Key actions and decisions in the year relevant to this stakeholder group
- Continued to engage directly with customers to better understand
changing needs and challenges, leading to several innovations in both
presentation of products and further trial activity on new applications.
- Worked with customers to assist with their own sustainability policies
and practices including becoming a member of the Supplier Ethical Database
(SEDEX) provides a high-level transparency of operational standards,
employment practices and corporate ethics.
Employees
Anpario has over 100 employees across the world in a range of different roles.
All staff are key to delivering on the strategic plans and success of the
Group and we continue to develop our HR strategy and policies.
Key interests
- Fair and equitable recruitment and remuneration practices and
policies.
- Safe working environments.
- The opportunity for personal growth and career progression.
Key actions and decisions in the year relevant to this stakeholder group
- Regular company newsletters and company updates distributed to keep
all staff well informed.
- Regular onsite meetings across management groups and departments to
facilitate communication and decision making at all levels.
- Continued to support staff training programmes and the internal
coaching programme, we now have several qualified coaches and continually seek
to encourage new coaching relationships for staff.
Community and Environment
Anpario seeks to ensure a sustainable future, conducting business in a
socially, ethically, and environmentally responsible manner. Anpario's team
seek to meet environmental challenges with sustainability at their heart and
progressing on a journey of continuous evolution and progression. Further
information to the below can be found in the Environment and Social
Responsibility Report.
Key interests
- Conducting business in an ethically and environmentally responsible
manner.
Key actions and decisions in the year relevant to this stakeholder group
- Continue to evaluate and expand our climate related reporting and
disclosures
- Through our Give Something Back Volunteer Day scheme we offer all
staff one paid day a year to support a charity of their choice
- Employees vote for an annual charity of the year. For 2023 the Charity
chosen by staff was Dementia UK, https://www.dementiauk.org/
(https://url.avanan.click/v2/___https:/www.dementiauk.org/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6Njo4NTA1OmY2ZmQzZTUzYjQ2YmZmZDJhOWY3ZmYwNTg0YjMwYmI1ZTVkZmUzYzJlMTNiNTgwZjQyZTY4OGMyYTNlYTk1ZTU6cDpU)
Suppliers
Our external supply chains are critical to the success of the business and
integral in our ability to deliver high-quality and consistent products to our
customers.
Key interests
- Mutually beneficial relationships with fair business practices.
- Supply chain resilience.
- Prompt payment.
Key actions and decisions in the year relevant to this stakeholder group
- Ensuring that in the current difficult economic conditions we have
continued to support our supply chain by making prompt payment for supplies to
ease any working capital pressure on our suppliers.
- Held regular review meetings with key suppliers and Anpario management
to discuss and review matters such as pricing, supply and service levels.
Key decisions affecting multiple stakeholders
The table below outlines the key decision which affect more than one
stakeholder group and outlines the actions taken and the groups considered as
part of the decision-making process.
Review of operating budgets, expenditure plans and resource levels in light of reduced performance
Actions taken
- Reevaluated multi-year budgets considering difficult market conditions
and the impact of reduced demand on sales and profit performance.
- Engaged with management and staff and evaluated all sources efficiency
and costs savings from current activity and expenditure plans.
- Considered the level of operating resource required and launched a
redundancy and restructuring exercise to right-size the business.
- Clear communication and processes established to keep the workforce
informed of both the reasons for and the processes related to the
restructuring.
Key stakeholder groups considered
- All stakeholder groups were impacted through this process and the
related actions taken.
- This was undoubtedly a difficult time for all staff and we deeply
appreciate the understanding, resilience and commitment to Anpario shown
through this period.
- The impact of course was greatest on those directly affected for whom
we express our sincerest gratitude for their contributions to Anpario.
Tender Offer
Actions taken
- Reviewed capital allocation to optimise long-term returns for
shareholders.
- Evaluated options for returning cash to shareholders in view of the
levels within the Group.
- Determined that most appropriate action was a £9m Tender Offer to
repurchase 4,000,000 shares.
- The decision was made to cancel the share purchased, alongside 440,388
existing shares held in treasury.
- Engaged with professional advisers to launch and conclude the Tender
Offer.
Key stakeholder groups considered
- A number of stakeholder groups were affected by the capital allocation
decision as it reduced levels of cash within the business that could be used
for further internal or acquisitive investment. However, careful consideration
was given to the investment opportunities and requirements at the time, and
cashflow projections and anticipated inflows of cash through reduced working
capital levels.
- For shareholders the Tender Offer gave them the ability to efficiently
sell their holding for cash if they so wished or retain their holding and
effectively have a larger share of Anpario following the conclusion of the
Tender Offer.
Risk management
Risk Register and Management Process
We continually examine in detail the key risks facing our business in the
context of our overall business strategy and evaluate their likelihood and
potential impact. The risks we have examined are the most significant but not
necessarily the only ones associated with the Group and its businesses. In
common with all businesses, we face risks of a generic nature for example
failure of projects, foreign exchange impacts and the recruitment, development
and retention of employees. In considering our risks during the year we have
performed detailed assessments at a global and regional level. We assess the
likelihood of their occurrence and potential impact and implement appropriate
and proportionate risk mitigation measures.
As part of our continual risk management process we consider new and emerging
risks. As supply chain pressures have improved raw materials and stockholdings
(including our own) have reduced resulting in reduced demand during 2022 and
2023. The Russian invasion of Ukraine and resulting impacts on agricultural
supply chains, logistics and energy costs continues to impact our industry.
Growing tensions in the Middle East and disruption to shipping in the Suez
Canal is also a concern. Price inflation and recessionary factors will
continue to depress worldwide economies and agriculture and suppress demand
for Anpario products. This along with the oversupply of poultry, pork and
shrimp has led to a reduction in the use of speciality feed additives as
producers scaled back production and looked to reduce input costs. These
factors also increase credit risk in some territories and customers. On the
positive side recent raw material price increases and supply issues have
alleviated and in some instances reversed which has helped recover gross
profit margins.
We have also continued our focus on sustainability and climate change related
issues which has seen a substantial increase in consumer and investor focus on
climate. In addition, we consider global meat consumption patterns and the
potential impact on our operations on the positive side as Anpario's products
reduce antibiotic use and demand for anti-viral feed mitigants.
The Group's risk management process through engagement of the Executive
Management team and global management team is conducted on at least an annual
basis and reviewed by the Board, as follows:
1. Identify the risk and likelihood for each function and regional
operation;
2. Analyse and assess the risk, its potential severity and the
impact and priority for the business;
3. Consider risk rating and trends on a low to high scale;
4. Plan to mitigate or treat the risk and identify resources or
investment required;
5. Implement mitigation procedures by obtaining resources and
approvals necessary and put in place necessary actions; and
6. Monitor, measure and control the risk and its likely impacts
which will change and evolve so that you we can respond and react in a timely
efficient manner.
The Risk Framework below shows those risks that are more specific to our
business together with details of the controls and mitigation in place to
manage our exposure. More information on our approach to effective risk
management can be found in the Corporate Governance section, Principle 4.
Risk management actions taken in the year
Some of the key risk management actions taken in the year include:
- strong growth of sustainably sourced omega 3 supplement brand
Optomega® Algae;
- development of Orego-Stim® Forte to produce a water-soluble
version for use in aquaculture.
- collaboration with Indian partner to manufacture Orego-Stim
locally to provide greater market access.
- UK Patent granted in respect of market leading toxin binder
Anpro.
- received first ever King's Award for Enterprise for Sustainable
Development.
- membership of SEDEX (Supplier Ethical Data Exchange) giving
supplier chain transparency on a global platform.
- installation of a state-of-the-art fully automated palletiser to
enhance factory efficiency and manage demand volatility.
- automation investment in the production facility has improved
efficiency;
- successfully implemented an overhead reduction programme to
reduce under recoveries without impacting our product quality customer
service; and
- review and updating of business continuity plans and procedures
including product and site security and defence plans.
Risk framework
Market Risk
Risks Control and mitigation Risk rating
- Gaining market entry for products and access to end users. - Establishing a global marketing strategy with clearly defined product Likelihood: Medium
and species related goals for each region.
- Competition from global operators.
- Regular monitoring of sales budgets and sales prospects by the
- M&A activity resulting in market consolidation. management and the Board.
- Human movement restrictions e.g. Covid-19, SARS. - Effective disaster planning communicated on a timely basis.
- Animal diseases e.g. African Swine Fever, Avian Influenza, PEDV. - Regional and species diversity and an extensive range of products with
new product development and launches.
- Global commodity prices affecting both supply of inputs and demand for
our products. - A clear and effective marketing strategy communicating the benefits of
Anpario sustainable solutions.
- Climate and environmental changes.
- Close customer engagement, relationships to understand and address
- IP theft e.g. trademark infringements. their needs.
- Global trademark watches and pre-emptive legal action.
- Ensuring our trademark portfolio supports and is reflective of our
marketing strategy.
Impact: Medium
Trend: Increasing
Potential impact
- Lower sales revenue and profit.
- Reduction in customers or target customers.
- Loss of market share.
- Loss of market.
Political and Economic Risk
Risks Control and mitigation Risk rating
- Wars in Ukraine and Middle East - Proactive and continual management of pricing. Likelihood: Medium
- Interest and Inflationary pressures. - Close communication with customers on key pricing and supply issues.
- Customer pressures to reduce costs. - Limiting and hedging of foreign currency exposure.
- Exchange rate fluctuations. - Wide geographic diversity reduces dependency in a single country or
region.
- Geopolitical risks including political and economic instability.
- Rigorous customer and supplier due diligence and monitoring of
- International and individual targeting sanctions. regional and customer exposures.
- Bad debts or trade disputes. - Use of credit insurance and letters of credit.
Impact: Medium
Trend: Increasing
Potential impact
- Volatility in markets. Supply chain: delays, additional costs,
tariffs, or lack of continuity.
- Regulatory changes.
- Border delays.
- Reduced revenue, increased costs and lower profitability.
Product Development Risk
Risks Control and mitigation Risk rating
- Failure to deliver new products due to lack of innovation, pipeline - Continual monitoring and review of the lifestyle and potential return Likelihood: Medium
delays or products not meeting commercial expectations. from current products. Different regions have markets that are at different
points in development.
- Failed or aborted trials during development or customer acceptance
stages. - Potential new development projects are evaluated from a commercial,
financial and technical perspective. The pipeline is reviewed regularly by the
- Lack of significant financial, R&D and other resources. Board.
- Failure to meet regulatory requirements. - Each research project or trial is managed by qualified technical
managers. Projects and trials are monitored to ensure that they are completed
on time, deliver expected outcomes and provide useable data. Final review and
evaluation to ensure learning.
- Multiple studies are conducted to assess the effects of a product on
target species.
- In respect of all new product launches a detailed marketing plan is
established and progress against that plan is regularly monitored.
- Patent filings to retain competitive risk and tax advantages.
Impact: Medium
Trend: No change
Potential impact
- Reduction in competitiveness in the market. Lost opportunities.
- A succession of trial failures could adversely affect our ability to
deliver shareholder expectations.
- Our market position in key areas could be affected, resulting in
reduced revenues and profits.
- Where we are unable to develop and launch a product this would result
in impairment of intangible assets.
- Valuable resources may be wasted.
Production, Quality and Logistics Risk
Risks Control and mitigation Risk rating
- Failure to source supply of raw materials. - Planned increase in raw material and finished good storage facilities. Likelihood: Medium
- Inadequate or poor adherence to quality systems allow faulty product - Rigorous planning of production runs and shipping container
to reach customer. requirements.
- Sub-standard raw materials. - All products can be produced at approved toll manufacturers in the UK.
Business interruption and property insurance policies arranged.
- Failure to secure timely shipping of goods to customers.
- Business Continuity Plan in place along with
- Plant or line closures due to major accident, incident, disaster, or
sabotage. - Product Security, Food Defence and Product authenticity Plans.
- Defective plant and equipment in our manufacturing facility. - Third party advisor utilised, and strict management controls enforced.
Employers' liability insurance arranged.
- Supplier accreditation, UFAS and FEMAS certification, HACCP and
Trading Standards compliance. Public and product liability insurance arranged.
- SEDEX membership increasing transparency of supplier standards and
ethics.
Impact: Medium
Trend: Decreasing
Potential impact
- Failure or Increased lead-time to supply customers.
- Loss of production for a significant period e.g., more than one month
potentially leading to loss of sales.
- Accidents or fatality leading to possible closure or fine.
- Site security compromised, external or internal acts of sabotage.
- Poor product quality, contamination, counterfeit or passing off.
- Damage to customer relationship, reputation, and financial loss.
Climate Change Risk
Risks Control and mitigation Risk rating
- Lack of Board approved strategy to meet our specific challenges. - Board approved global sustainability strategy and implementation plan. Likelihood: Medium
- Lack of tangible verifiable measures and target. Failure to achieve - Engagement of management in understanding and implementing operational
carbon zero targets in line with government and or industry requirements. and reporting obligations.
- Failure to make required disclosures in line with TCFD and regulatory - Executive and management performance related targets in line with
bodies. Group strategic objectives.
- Impact of climate change on suppliers' key raw materials, agricultural - Investment and research on emissions reduction in animal production.
commodities, and markets.
- Collaboration with suppliers and other third parties with common goals
relating to climate change challenges.
- Executive workshops to review key climate change risks and
opportunities.
- Implementation of ISO 14001 Environmental Management Standard.
- Industry and public recognition for example, King's Award for
Sustainable Development,
Impact: High
Trend: Increasing
Potential impact
- Loss of key customers, suppliers, investor base.
- Loss of raw material sources and potential income stream.
- Lower sales revenue and profit.
- Failure to attract, recruit and retain high quality and skilled
employees.
Environmental, Social and Governance (ESG) Risks
Risks Control and mitigation Risk rating
- Failure to lead the feed additive market in supporting our customers - Board level role responsibility with the Corporate Responsibility Likelihood: Medium
producing sustainable animal protein production. Director specifically focused on the risks and leading appropriate action
plans.
- Breach of bribery and/or corruption laws or international sanctions.
- Attainment of ISO 14001 accreditation and training internal auditors;
- Failure to adhere to labour laws and standards globally.
- 3 Pillars: People, Planet and Promise platform for action plans and
- Poor ESG ratings leading to failure to attract high quality employees. communication.
- Unsafe, inadequate, or non-compliant health and safety issue or - Specific ESG targets for all key Executive and group management.
response to environmental, infrastructure or other significant corporate
failures. - Established policies, procedures and training to ensure awareness of
obligations and compliance.
- High standards of working conditions and market benchmarked pay
exceeding the living wage.
- Code of Conduct requiring internal and third-party acceptance and
anti-bribery and anti-corruption guidance issued for business partners.
- SEDEX membership increasing transparency of own and business partners'
standards and ethics.
Impact: Medium
Trend: Increasing
Potential impact
- Loss of and negative Investor sentiment and withdrawal of support.
- Shareholder action and votes against Board re-election.
- Fines, criminal action against the Company, Directors, or employees.
Systems Risk
Risks Control and mitigation Risk rating
- IT or communications failure, due to, accident or sabotage. - Internal review and implementation of enhanced digital security Likelihood: Medium
measures to detect and prevent possible cyber-attacks.
- Cyber-attack.
- Regular back up of data, third party provider for storage and system
- Data breach. support.
- Loss of IP or sensitive data through AI or LLM. - Firewall, regular back up of data, crime and cyber insurance in place.
- Continual review and strengthening of processes, controls, and
security.
- Information Policy, Privacy Policy, Breach Notification Policy and
Disaster Recovery Plan in place.
- Staff and partner awareness communication and training.
Impact: High
Trend: Increasing
Potential impact
- Unable to operate.
- Criminal attack could be aimed at stealing money, extortion, fraud,
data theft etc.
- GDPR imposes heavy financial penalties, plus reputational damage.
- Serious security breach and confidential information, IP or sensitive
data made available in public domain.
- Third party rights violated and breach of agreements and financial
loss.
Legislation, Regulatory and Non-compliance Risk
Risks Control and mitigation Risk rating
- Changing market, legislative and regulatory needs. - Vigilance and monitoring of all appropriate notifications to ensure Likelihood: Medium
compliance and pre-emptive actions.
- Divergence between UK and EU regulatory frameworks.
- Clear communicated policies and Code of Conduct issued to all
- Failure to comply with export controls and sanctions. employees and partners.
- Failure to comply with anti-bribery and anti-corruption legislation. - Internal training and awareness communications.
- Non-compliance with tax, legal or regulatory obligations. - Support from external experts in all countries in which we operate.
- Failure to comply with regulatory requirements. - Reasonable due diligence is carried out on all customers and end
users.
- Sanction checking processes are implemented and documented.
Impact: Medium
Trend: Increasing
Potential impact
- Loss of market presence and or share.
- Litigation against Anpario, potential fines and reputational damage.
- Financial penalties, reputational damage, unable to operate in certain
jurisdictions.
- Prevented from trading with countries even though our products are
exempt from sanctions.
The strategic report was approved by the board and signed on its behalf by:
Richard Edwards
Chief Executive Officer
20 March 2024
Board of Directors
Non-Executive Directors
Matthew Robinson, MA, ACA.
Non-Executive Chairman
(A,N,R)
Matthew Robinson was appointed to the Board in January 2021 and became Chair
on 29 June 2023. Matthew has spent much of his career working with and
advising growth companies and was formerly Chairman of Inland Homes plc and
Non-Executive Chairman of AIM listed Goldplat plc. Matthew started his career
as a Chartered Accountant and was previously a Corporate Finance Director at
finnCap and Panmure Gordon.
Tim Pollock
Non-Executive Director
(A,N,R)
Tim Pollock was appointed to the Board in August 2023. Tim has an extensive
track record at executive director level for several multi-national groups
covering agriculture, animal nutrition, soft commodities, and the food
ingredient sector. These roles include Director of Strategic Development and
M&A for Lallemand Animal Nutrition, a leading global producer of specialty
feed additives and as the Food & Agriculture Investment Director for
British International Investment, the development finance institution of the
British Government. He founded AgCap in 2018, which provides consultancy
advice to the food and agribusiness sectors.
Tim also brings public markets experience from his time as a Non-Executive
Director and Interim Group Managing Director of London Stock Exchange AIM
quoted Zambeef Products plc, the largest vertically integrated food retailing
brand in Zambia.
Executive Directors
Richard Edwards, B Eng (Hons), C Eng, MBA.
Chief Executive Officer
(N)
Richard Edwards joined the Board in November 2006 as Chief Executive following
the acquisition of Agil. He was appointed Executive Vice-Chairman in April
2011 with specific responsibility for implementing acquisition strategy. In
January 2016, Richard was appointed to the position of CEO.
Richard has extensive general management and corporate strategy experience
gained in the sales and distribution sector both in the UK and
internationally. Previously he was Director and General Manager of WF
Electrical, a £140 million turnover division of Hagemeyer (UK) plc, a
distributor of industrial products, and gained significant experience in
corporate development at Saint Gobain UK building materials business.
Marc Wilson, BA (Hons), ACMA.
Group Finance Director
Marc is a member of the Chartered Institute of Management Accountants and
currently Group Finance Director as part of the Executive Management team for
Anpario. Marc joined Anpario in 2010 and his responsibilities have included
the development and rollout of Anpario's global ERP system along with the
accounting and integration of acquisitions during this time.
Marc Wilson joined the Board as Group Finance Director with effect from 1 July
2021.
Karen Prior, BSc (Hons), FCA.
Corporate Responsibility Director & Company Secretary
Karen joined the board in October 2009, originally as Group Finance Director
until 1 July 2021 when she relinquished the role and became Corporate
Responsibility Director. Previously, Karen has had roles as Finance Director
of Town Centre Securities PLC, a listed property group and UK Finance Director
of Q-Park, where she was instrumental in its establishment and growth in the
UK.
Karen spent 10 years of her early career with Ernst and Young specialising in
providing audit and business services to entrepreneurial businesses.
Key
A: Audit Committee N: Nomination Committee R: Remuneration Committee
The Terms of Reference of the Audit, Nomination and Remuneration Committees
are available on the Company's website: www.anpario.com/aim-26/
(https://url.avanan.click/v2/___http:/www.anpario.com/aim-26/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjpmZjYzOjQ5OWRjOGM3NGI0Y2FjMmNmNWU4ZDg5OGNmYzE0ZjhjNGUyNDExNWFlNWZkMTk5ODAwZTcwYThkZTQ4YTZiMmI6cDpU)
.
Corporate governance
Chairman's introduction
The Company's shares are traded on the Alternative Investment Market ("AIM")
of the London Stock Exchange. Anpario applies the Quoted Companies Alliance
Corporate Governance Code ("QCA Code").
Anpario offers natural solutions to the food farming industry which work in
harmony with the natural aspects of an animal's biology to promote healthy
growth at the least cost to the environment and the producer. Our products
enable the production of top-quality protein that partners future farming
practice around the world. This objective and our engagement with
stakeholders, ensures that we act in a manner that is responsible and
beneficial to all.
The board and staff at the Company are committed to behaving professionally
and responsibly to ensure that the highest standards of honesty, integrity and
corporate governance are maintained. Enshrining these values through the
Company's culture, objectives and processes is essential to support the
success of the Company in creating long-term shareholder value.
Anpario is committed to conducting business in a socially, ethically and
environmentally responsible manner. We do this by focusing on a 3 Pillars
framework: 'People; Planet; and Promise'.
Principle 1: Our strategy and business model to promote long-term value for shareholders
Anpario is well positioned to benefit from the trends in growth of the
world's population, the increasing demand for meat and fish protein in
developing countries and the tightening of global regulation favouring more
natural feed additive solutions. Seizing these opportunities is how Anpario
intends to deliver long-term shareholder value. More information is included
in the Strategic Report.
Anpario has specific resource and processes in place to proactively identify
and manage risk to protect the continued growth and long-term future that is
possible as outlined above. Our annual report details specific financial and
non-financial risks and uncertainties facing the business and measures in
place to mitigate them.
Principle 2: Understanding and meeting shareholder needs and expectation
Communications with shareholders are given high priority and Anpario
recognises the importance and value in reciprocal and open communication with
its many investors. This is key to ensure alignment between the motivations
and expectations of our shareholders and our strategy and business model.
This communication takes place in many forms to serve different purposes. Our
Interim Statements and Annual Reports contain detailed information for
shareholders to understand our performance, strategy and future plans. Between
these disclosures, the Company also issues RNS announcements, as required,
which serve to keep shareholders updated about regulatory matters or changes
that they should be notified of. These RNS announcements, as well as wider
news articles about the Company, are available on our website
www.anpario.com/investor/.
The Annual General Meeting ("AGM") is the main opportunity for all
shareholders to engage with Anpario. Shareholders are notified in advance of
the date and location of the meeting as well as the resolutions that are to be
voted on. At the meeting, the Board and key personnel give a presentation
about the most recent published results and our strategy. They are also
available to answer any questions that shareholders may have. The Company's
articles have been updated to enable the holding of virtual meetings in
future.
The Directors actively seek to build strong relationships with institutional
investors and investment analysts. Presentations are given immediately
following Interim Statement and Annual Report announcements. Feedback directly
from shareholders via the Company's advisers after these regular analyst and
shareholder meetings ensures that the Board understands shareholder views. The
Board as a whole are kept informed of the views and concerns of major
shareholders and are made aware of any significant investment reports from
analysts.
Shareholders are encouraged to contact the Company should they have any
questions or concerns and can do so using a dedicated email address
investor@anpario.com. This is actively used by our Shareholders and
successfully enables them to engage with the Board in addition to attaining
assistance on individual shareholder specific matters with which we may be
able to help. The Chairman and other Directors will meet or have contact with
major shareholders as necessary. Where appropriate on specific matters the
Board or its Committees will conduct shareholder consultations.
The Executive Directors, management and staff as appropriate hold shares and
participate in incentive plans in the Company which ensures that their
interests are fully aligned with those of other shareholders.
Principle 3: Corporate social responsibilities and wider stakeholders
Anpario seeks to ensure a sustainable business, behaving with social, ethical
and environmental responsibility and engaging with all of its key
stakeholders, including the communities in which the Group operates, its
people and the environment. As noted we have launched the 3 Pillars: 'People,
Planet and Promise' as a framework to focus our behaviours with respect to
sustainability and our ESG objectives. Full details of the Group's approach to
these matters are included in the Environmental and Social Responsibility
Report later in this annual report and on the website:
www.anpario.com/about/sustainability/
(https://url.avanan.click/v2/___http:/www.anpario.com/about/sustainability/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjoyODBkOjRhZWE3YTlhMDBjMjBjZGEzNTg0MTQ2ZTY1NDkwMDMxMTNlMjNjMzVkNDJkMjdhZDU1ZjViOWEwMWRkN2FkNmE6cDpU)
.
Principle 4: Effective risk management
Anpario has specific resource and processes in place to proactively identify
and manage risk to protect its continued growth and long-term future. However,
any such system of internal control can provide only reasonable, but not
absolute, assurance against material misstatement or loss. The Board considers
that the internal controls in place are appropriate for the size, complexity
and risk profile of the Company and that they balance exploiting
opportunities and protecting against threats. The Risk Management section of
this annual report details specific financial and non-financial risks and
uncertainties facing the business and where possible the measures in place to
mitigate them.
Risk management and control
Effective risk analysis is fundamental to the execution of Anpario's business
strategy and objectives and our risk management and control processes are
designed to make management of risk an integrated part of the organisation.
The framework is used to identify, evaluate, mitigate and monitor significant
risks and to provide reasonable but not absolute assurance that the Group will
be successful in achieving its objectives. The focus is on significant risks
that, if they materialise, could substantially and adversely affect the
Group's business, viability, prospects and share price.
A formal Internal Audit function is not felt to be suitable for the Group at
the current time due to its size, however this is kept under review alongside
an appropriately robust internal control system.
Risk management process
We recognise that a level of risk taking is inherent within a commercial
business. Our risk management process is designed to identify, evaluate and
mitigate the risks and uncertainties we face.
The CEO is the ultimate Risk Manager. The Board establishes our risk appetite,
oversees the risk management and internal control framework and monitors the
Group's exposure to principal risks.
The Executive Management Board (EMB) owns the risk management process and is
responsible for managing specific risks. The EMB members are also responsible
for embedding rigorous risk management in operational processes and
performance management and review.
The EMB members are responsible for the risk analysis, controls and mitigation
plans for their individual section of the business.
The Audit Committee reviews the effectiveness of the risk management process
and the internal control framework and ensures appropriate executive ownership
for all key risks.
These processes ensure that all Directors receive detailed reports from
management and are able to discuss the risks, controls and mitigations in
place and therefore satisfy themselves that key risks are being effectively
managed.
Internal control framework
Anpario's internal control framework is designed to ensure the:
- effectiveness and efficiency of business operations;
- reliability of financial reporting;
- compliance with all applicable laws and regulations; and
- assignment of Authority and Responsibility.
Anpario's values underpin the control framework and it is the Board's aim that
these values drive the behaviours and actions of all employees. The key
elements of the control framework are:
Management structure
The Board sets formal authorisation levels and controls that allow it to
delegate authority to the EMB and other Managers in the Group. The management
structure has clearly defined reporting lines and operating standards.
Strategy and business planning
- Anpario has a strategic plan which is developed by the EMB and
endorsed by the Board;
- Business objectives and performance measures are defined
annually, together with budgets and forecasts; and
- Monthly business performance reviews are conducted at both Group
and business unit levels.
Policies and procedures
Our key financial, legal and compliance policies and procedures that apply
across the Group are:
- Code of Conduct;
- Designated authorities and approvals;
- ISO 14001 Environmental Management Systems;
- Anti-Bribery and Anti-Corruption Policy;
- Modern Slavery Policy;
- GDPR and Privacy Policy; and
- Due diligence processes including rigorous sanctions checks.
Technical standards and operational controls
Our operational control processes include:
- Product pipeline review: product pipeline is reviewed regularly
to consider new product ideas and determine the fit with our product
portfolio. We assess if the products in development are progressing according
to plan and evaluate the expected commercial return on new products;
- Lifecycle management: lifecycle management activities are
managed and reviewed for our key products to meet the changing needs of our
customers, environmental and regulatory standards;
- Quality assurance: a manufacturing facility with an established
Quality Management System operating under FEMAS and UFAS and designed to
ensure that all products are manufactured to a consistently high standard in
compliance with all relevant regulatory requirements;
- Product registration: a robust system operated by our regulatory
team to ensure all products are correctly registered within the jurisdiction
in which they are sold; and
- Pricing: a pricing structure which is managed and monitored to
provide equitable pricing for all customer groups and compliance with
regulatory authorities.
Financial controls
Our financial controls are designed to prevent and detect financial
misstatement or fraud. This provides reasonable, but not absolute, assurance
against material misstatement or loss. They include:
- a formalised reporting structure which incorporates the setting
of detailed annual budgets and key performance indicators which are updated on
a regular basis to form forecasts;
- management and Board meetings where all key aspects of the
business are presented, reviewed and discussed including comparison of current
and historical performance as well as budgets and forecasts;
- defined authorisation levels for expenditure; the placing of
orders and contracts; and signing authorities;
- transactional level controls operated on a day-to-day basis;
- daily reconciliation and monitoring of cash movements by the
finance department and the Group's cash flow is monitored;
- segregation of accounting duties;
- reconciliation and review of financial statements and
judgements;
- internal and external training to ensure staff are aware of the
latest standards and best practice; and
- membership of professional bodies and compliance with associated
code of ethics.
Principle 5: The Board
The Board of Directors is collectively responsible and accountable to
shareholders for the long-term success of the Company. The Board provides
leadership within a framework of prudent and effective controls designed to
ensure strong corporate governance and enable risk to be assessed and managed.
The Board regularly reviews the operational performance and plans of the
Company and determines the Company's strategy, ensuring that the necessary
financial and human resources are in place in order to meet the Company's
objectives. The Board also sets the Company's values and standards, mindful of
its obligations to shareholders and other stakeholders.
Full details and biographies of the Board are available on our website, the
Board comprises of two independent Non-Executive Directors and three Executive
Directors.
Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
Richard Edwards Chief Executive Officer B Eng (Hons), C Eng, MBA. M
Marc Wilson Group Finance Director BA (Hons), ACMA.
Karen Prior Corporate Responsibility Director BSc (Hons), FCA.
Independent Non-Executive Directors
Key Committees
Name Role Qualifications Audit Nom. Rem.
Matthew Robinson Non-Executive Chair MA, ACA. C C M
Tim Pollock Non-Executive Director M M C
Audit = Audit Committee, Nom. = Nomination Committee, Rem. = Remuneration
Committee
C = Chair, M = Member
The Board considers that the Non-Executive Directors are independent.
All Directors are subject to reappointment by shareholders at the first AGM
following their appointment and thereafter by rotation.
The Board delegates its authority for certain matters to its Audit,
Remuneration and Nomination Committees. The Board approves and reviews the
terms of reference of each of the Committees which are available on the
Company's website, www.anpario.com/aim-26/
(https://url.avanan.click/v2/___http:/www.anpario.com/aim-26/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjpmZjYzOjQ5OWRjOGM3NGI0Y2FjMmNmNWU4ZDg5OGNmYzE0ZjhjNGUyNDExNWFlNWZkMTk5ODAwZTcwYThkZTQ4YTZiMmI6cDpU)
.
The Board meets formally at least four times per annum. All Board members
receive agendas and comprehensive papers prior to each Board meeting. The
Corporate Responsibility Director is also the Company Secretary and is
responsible to the Board for ensuring that Board procedures are followed and
that applicable rules and regulations are adhered to.
In addition to formal Board and Committee meetings, ad hoc decisions of the
Board and Committees are taken after discussion throughout the financial year
as necessary through the form of written resolutions.
All Directors in office at the time of the various committee meetings were in
attendance for all of the meetings convened during 2023. A list of the
meetings convened during the year is set out below.
Number of meetings convened Full attendance of meeting
Board meetings 9 Yes
Audit Committee meetings 2 Yes
Remuneration Committee meetings 4 Yes
Nomination Committee meetings 3 Yes
The Chief Executive Officer and Group Finance Director work full time for the
Group. The Corporate Responsibility Director works part-time and ensures the
roles and responsibilities of the position are fully met. The Non-executive
Directors have commitments outside of Anpario plc. They are summarised on the
Board biographies available from www.anpario.com/investor/aim-26/
(https://url.avanan.click/v2/___http:/www.anpario.com/investor/aim-26/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjpiOWZjOjFjMTQ4MDViYzMyZjNkMTlkMGRiYTc1MmFlMmQyMWM0NTRiMWRkZmY4ZDg2MjQ5ZmYwZmUwNWE1NGUwZmZhN2I6cDpU)
. All the Non-Executive Directors give the appropriate amount of time required
to fulfil their responsibilities to Anpario.
Principle 6: Ensuring Directors have between them the necessary up-to-date experience, skills and capabilities
The Nomination Committee aims to ensure that composition of the Board
reflects appropriate balance of skills and experience required to ensure
long-term shareholder value and manage risk. Details of the role of the
Nomination Committee and the activities it performs in relation to these
matters is included in the "Maintaining governance structures" section later
on in this document.
The Board biographies available on the website give an indication of their
breadth of skills and experience. Each member of the Board takes
responsibility for maintaining their own skill set, which includes roles and
experience with other boards and organisations as well as formal training and
seminars.
Principle 7: Evaluating board performance
The performance of the Board is evaluated formally on an annual basis,
following the conclusion of the annual Audit and finalisation of the Annual
Report. The Chairman leads this process which looks at the effectiveness of
both the Board as a unit and its individual members.
When addressing overall Board performance the factors considered, include but
are not limited to, underlying group financial performance, the success of
new strategy implementation and the effectiveness of risk and control
measures. This process further looks at the performance of each member and
considers their individual successes, commitment and alignment to the overall
Group strategy. As appropriate, it will also look to confirm that members
have maintained their independence.
The Nomination Committee is responsible for determining Board level
appointments, details of its role and terms of reference are provided later in
this document. The Executive Board members determine the appointments to the
Executive Management team, in line with Board approval procedures.
Succession planning is a key part in ensuring the long-term success of the
Company. The Executive team ensure that potential successors are in place
within the business and are given the required support and guidance to develop
further. At the required time, it is the Nomination Committee's role to make
decisions about future appointments to the Board.
Principle 8: Promoting a corporate culture based on ethical values and behaviours
Anpario has a strong ethical culture, the Board is responsible for setting and
promoting this throughout our processes and behaviours. The policies related
to these matters are regularly reviewed and updated and distributed to
employees and other stakeholders as appropriate. Further, specific training
is given to keep staff updated on relevant changes, these sessions are often
recorded for future reference and new staff induction.
A copy of our Code of Conduct is available on our website,
www.anpario.com/code-of-conduct/
(https://url.avanan.click/v2/___http:/www.anpario.com/code-of-conduct/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6Njo5YThhOmYxYzQ0N2IxMDM1YzVmYjFmNmQyOGJkYWRkNGQ0MzcwM2I4YzRlOWJjMDQ0MDMxOWUzYjk5NmExOWEzY2QyMDY6cDpU)
. Anpario has stated policies on Corporate Social Responsibility, Anti-Bribery
and Anti-Corruption, Modern Slavery Policy and Whistleblowing Policy that are
applicable to all our employees, other workers, suppliers and those providing
services to our organisation.
The Company has achieved ISO 14001 standard on Environmental Management
Systems accreditation along with a qualified internal audit function.
Anpario's Sustainability Report and accompanying video is available on the
website https://www.anpario.com/about/sustainability/
(https://url.avanan.click/v2/___https:/www.anpario.com/about/sustainability/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjozMDU2OjM5ZTc2ZWQ2NTg2YTk0NjliYTBlODk0MzY5MjYzNGYxZDM4MDJmZTc1YjBkNDgyMTJlNTE5YzMyNWE4MjM4ZjQ6cDpU)
.
Principle 9: Maintaining governance structures
Anpario is confident that the governance structures in place in the Company
are appropriate for its size and individual circumstances whilst ensuring they
are fit for purpose and support good decision making by the Board.
The Board defines a series of matters reserved for its decision. These
include strategy, finance, corporate governance, approval of significant
capital expenditure, appointment of key personnel and compliance with legal
and regulatory requirements.
There is clear segregation of responsibility within the Board. The
Non-Executive Chairman is responsible for providing leadership to and managing
the business of the Board, in particular ensuring strong corporate governance
policies and values. The role of Chief Executive Officer is concerned with the
formulation and implementation of the strategy of the Company and is
responsible for all operational aspects of the business. The role of the Group
Finance Director is to provide strategic and financial guidance and to
develop the necessary policies and procedures to ensure sound financial
management and control of the Company. The Corporate Responsibility Director
also acts as Company Secretary and is further responsible for advising on
corporate governance matters and ensuring compliance with relevant legislative
and legal requirements.
Details of the key committees are set out below, the terms of reference for
each are available on our website as part of the committee section of the AIM
26 disclosures www.anpario.com/aim-26/
(https://url.avanan.click/v2/___http:/www.anpario.com/aim-26/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjpmZjYzOjQ5OWRjOGM3NGI0Y2FjMmNmNWU4ZDg5OGNmYzE0ZjhjNGUyNDExNWFlNWZkMTk5ODAwZTcwYThkZTQ4YTZiMmI6cDpU)
.
Audit Committee
Details are contained within the Audit Committee Report section of this Annual
Report.
Remuneration Committee
Details are contained within the Remuneration Committee Report section of this
Annual Report.
Nomination Committee
The Nomination Committee is comprised of the two Non-Executive Directors and
the Chief Executive Officer and is chaired by Matthew Robinson. Meetings are
held as required by the Chairman. The role of the committee is as follows:
- regularly review the structure, size and composition (including
the skills, knowledge, experience and diversity) of the Board and make
recommendations to the Board with regard to any changes;
- give full consideration to succession planning for Directors and
other senior executives taking into account the challenges and opportunities
facing the Company, and the skills and expertise needed on the Board in the
future;
- keep under review the leadership needs of the organisation, both
executive and non-executive, with a view to ensuring the continued ability of
the organisation to compete effectively in the marketplace;
- keep up to date and informed about strategic issues and
commercial changes affecting the Company and the market in which it operates;
- review and approve selection procedures for potential Board
members, whether executive or non-executive, whether for immediate appointment
to the Board or after a probationary period;
- be responsible for identifying and nominating for approval of
the Board, candidates to fill Board vacancies as they arise;
- ensure that on appointment to the Board, non-executive Directors
receive a formal letter of appointment setting out clearly what is expected of
them in terms of time commitment, committee service and involvement outside
Board meetings;
- ensure that following appointment to the Board, Directors
undergo an appropriate induction programme; and
- make recommendations to the Board on membership of the Board's
committees, in consultation with the chair of such committees, the
reappointment of any non-executive at the conclusion of their specified term
of office, the reappointment by shareholders of Directors under the Company's
rotation requirements taking into account the need for progressive refreshing
of the Board.
Before any appointment is made by the Board, evaluate the balance of skills,
knowledge, experience and diversity on the Board, and, in the light of this
evaluation, prepare a description of the role and capabilities required for a
particular appointment.
For the appointment of a Chairman or other Non-Executive, the committee shall
produce a job specification, including the time commitment expected. A
proposed Non-Executive's other significant commitments should be disclosed to
the Board before appointment and any changes to commitments should be reported
to the Board as they arise.
Prior to the appointment of a Director, the proposed appointee should be
required to disclose any other business interests that may result in a
conflict of interests and be required to report any future business interests
that could result in a conflict of interest. Full due diligence is undertaken
by the Company and NOMAD.
New appointments made in the year have gone through the processes as described
above and more information can be found in the Board Changes section of the
Chairman's Statement.
Principle 10: Communicating governance and performance matters with shareholders and wider stakeholders
Communications with shareholders are given high priority and we proactively
promote engagement through a range of measures. More details of which are
provided earlier in this document about how Anpario seek to engage with and
understand Shareholders and wider Stakeholders.
A General Meeting was held on 19 June 2023 to approve a resolution related to
the Tender Offer for which was approved without a significant number of votes
being cast against it.
The most recent AGM took place on 29 June 2023, the results of the AGM are set
out below. None of the resolutions had a significant number of votes cast
against it.
Ordinary resolutions
No Resolution Result
1 To receive the accounts for the year ended 31 December 2022, together with the Passed
reports of the Directors, the strategic report, and the report of the auditors
thereon.
2 To declare a final dividend for the year ended 31 December 2022 of 7.35p per Passed
Ordinary share payable on 28 July 2023 to shareholders on the register at
close of business on 14 July 2023.
3 To re-elect Richard Edwards as a Director, who retires by rotation. Passed
4 To re-elect Matthew Robinson as a Director, who retires by rotation. Passed
5 To re-appoint BDO LLP as auditors. Passed
6 To authorise the Directors to agree the auditors' remuneration. Passed
7 To grant the Directors' authority to allot shares or grant rights to subscribe Passed
or convert any security into shares in the Company pursuant to Section 551 of
the Companies Act 2006.
Special resolutions
No Resolution Result
8 To authorise the Directors to allot equity securities for cash as if Section Passed
561(1) of the Companies Act 2006 did not apply to any such allotment.
9 To issue shares for cash, otherwise than in connection with a pre-emptive Passed
offer, up to 10% of a company's issued share capital together with an
additional 10%.
10 To grant to the Company authority to exercise its power to purchase its own Passed
shares.
Our Company website includes historical Annual Reports and Interim Statements;
both in RNS format as part of its News section, and the published documents
are available from www.anpario.com/investor/annual-reports/
(https://url.avanan.click/v2/___http:/www.anpario.com/investor/annual-reports/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjpkNjZkOjBkZDUyZTBmM2E5ZWQ3OGMxMTRjOTVhYmZkODlmY2E5MTJjNWQ5OGZiZDYxZDFmM2RkN2M4MzQwYmNkMDYxNDk6cDpU)
. Included within these documents are the notices of previous AGMs, the
results of which are released as RNS announcements and can be found in the
News Releases section of our website www.anpario.com/investor/
(https://url.avanan.click/v2/___http:/www.anpario.com/investor/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjplM2EyOjkyOWYwYWRjNzE5YTAzYTJlZmI2YTI5N2EwOWEzNjdhNWRmNzY3ODRlMTc2NjZlZmVlMWRmZGE4YTRlYzljNWU6cDpU)
.
Environment and Social Responsibility Report
Environmental responsibility
Anpario seeks to ensure a sustainable future, conducting business in a
socially, ethically and environmentally responsible manner engaging with all
our key stakeholders, including the communities in which we operate. The key
issue of climate change has highlighted the critical part played by
agriculture and food production and the necessity for collective action to
achieve a net-zero emissions economy for a world that prioritises the health
of people and our planet.
Anpario's team seek to meet environmental challenges with sustainability at
their heart and pursuing a journey of continuous evolution and progression. We
recognise that it is our responsibility to identify problems faced by
producers globally and find effective sustainable solutions and as we continue
to grow on the strong foundations built over past decades. We aim to be a
leading light now and in the future.
We are leaders in the field of speciality feed additives, our products capture
natures ingenuity and work in harmony with the animals' biology to deliver
sustainable and natural solutions. It is through our products that we can have
the greatest positive impact, empowering global animal protein producers to
produce more from less, preserving vital resources, safeguarding food
production and human health, whilst protecting the planet. We promise to seek
new ways of operating that protect valuable resources and remain committed to
high environmental standards and robust health and safety measures.
We believe that through our product innovation, management of our operations
and aligning with stakeholders who share our values and sustainability
objectives, we can help our global customers to achieve their own sustainable
goals faster.
UN Sustainable Development Goals
The UN Sustainable Development Goals (SDG's) provide a globally accepted
roadmap for addressing many of the most urgent global, economic, environmental
and social challenges. Agreed at international level in September 2015, the
achievement of these 17 goals by 2030 requires extensive participation and
creates a key role for businesses in delivering entrepreneurial solutions that
can help meet these challenges. Anpario aligns with several SDG's and the
goals highlighted below are those where we recognise that we can play our part
in creating positive impact for people and the planet, now and into the
future.
SDG 2: Zero hunger - end hunger, achieve food security and improved nutrition and promote sustainable agriculture
Agriculture and fisheries can provide nutritious food for all and generate
decent incomes, while supporting people-centred rural development and
protecting the environment. Anpario's products work in tune with nature's
inherent processes within each of the animal species to support production of
safe and affordable food for a growing population and can help to:
- conserve, protect and enhance natural resources;
- improve rural livelihood, equity and social well-being through
productive farming; and
- enhance resilience of people, communities and ecosystems.
SDG 3: Good health and well-being - ensure healthy lives and promote wellbeing for all at all ages
We are leading work in collaboration with major feed producers to successfully
reduce the unnecessary use of antibiotics and other substances such as zinc
oxide and urea-formaldehyde. The misuse of antibiotics in agricultural
production is a significant threat to animal and human health. Anpario
provides products and guidance to support farmers to:
- improve animal gut health;
- defend against mycotoxins;
- reduce and where possible remove the unnecessary use of
antibiotics; and
- safeguard the use of antibiotics for effective treatment of sick
animals and humans.
SDG 12: Responsible consumption and production - ensure sustainable consumption and production patterns
Anpario's phytogenic and organic acid products help improve biosecurity and
prevent animal diseases, which can eliminate significant animal populations,
leading to devastating losses of food producing animals (e.g. Coccidiosis,
Necrotic Enteritis, Porcine Epidemic Diarrhoea (PEDv), and African Swine Fever
(ASF). Anpario's products are proven to work effectively alongside vaccines to
aid in disease control.
SDG 13: Climate action: take urgent action to combat climate change and its impacts
Anpario is tackling climate change through establishing energy reduction
initiatives and making renewable energy investments and commitments including
our ambition Net Zero Carbon by 2030. Our products help farmers to feed more
nutritious diets with a lower environmental footprint to their animals which
reduces negative environmental impacts such as:
- nutrient loss;
- greenhouse gas and ammonia emissions; and
- degradation of ecosystems.
SDG 14: Life below water - conserve and sustainably use the oceans, seas and marine resources for sustainable development
Anpario works to protect and enhance marine life by working with aquaculture
producers globally to improve production systems, sourcing responsibly and
reducing marine waste. Our 100% natural, aquaculture products work on the same
principles as for land animals and are effective for shrimp and other farmed
fish such as salmon and tilapia. We have developed new formulations to
support both sustainable and antibiotic free, production in this sector.
SDG 17: Partnerships for the Goals: strengthen the means of implementation and revitalise the global partnership for sustainable development
Anpario works collaboratively with other organisations and stakeholders with
the common goal of sustainable food production. To achieve optimal circular
sustainability means educating distribution networks, employees, partners and
working with customers, our supply chain and leading global universities who
share our goals to lead initiatives to replace unsustainable practices. It
means leading by example and actively demonstrating how we apply and achieve
sustainable objectives to our partners to inspire positive change.
Our Commitment and 3 Pillars
Anpario is committed to conducting business in a socially, ethically and
environmentally responsible manner. We will do this by focusing on 3 Pillars:
'People; Planet; and Promise'.
Sustainability is a core focus for Anpario and driven by our people, delivery
of leading product innovations, operational excellence and engagement with key
stakeholders. We are building on strong foundations and are committed to
continuous responsible development that will help to safeguard the planet now
and for future generations. Alongside our customers we work responsibly to
identify problems faced by protein producers globally and we collaborate with
leading industry and research partners to find effective sustainable
solutions.
People
Anpario is committed to:
- protecting and empowering employees;
- embracing diversity, equality and inclusion of our employees and
their communities; and
- working with our customers, suppliers and other stakeholders for
a better tomorrow.
At Anpario we recognise the importance of nurturing and developing lasting
relationships with customers and suppliers. Building and continually
developing a stable, highly motivated and skilled workforce is key to our
approach. Anpario is an inclusive organisation where everyone is treated
equally irrespective of gender, nationality, marital status, colour, race,
ethnic origin, creed, sexual orientation or disability. Together we drive a
positive culture with employee well-being prioritised and setting high
standards to ensure we effectively manage risk and health, safety and ensuring
a safe working environment. Our employees embody Anpario's key values of
"Integrity, Teamwork, Innovation and Leadership".
It is Anpario's policy to involve colleagues in the business and to ensure
that matters of concern to them, our aims, objectives and financial
performance are communicated in an open way. As far as possible, employees are
offered the opportunity to become shareholders to promote active participation
and commitment to our success.
The Employee handbook applies globally and includes detailed policies and
guides for employees which cover:
- Behaviour: Equal Opportunities and Dignity at Work, Anti-Bribery
and Anti-Corruption, Modern Slavery, Communications and Privacy.
- Family: Parental, Dependents, Maternity, Paternity, Flexible
working, Adoption.
- General: Grievance, Whistle blowing, Discrimination and
Bullying, and Disciplinary.
- Safety: Health and Safety handbook, Occupational Health Policy,
Drug and Alcohol abuse.
Gender and diversity
109 employees work for Anpario in the UK and its global operations. Employees
are recruited from local communities which has helped us build a very
ethnically diverse team of which we are very proud. The team includes 15
nationalities speaking 22 languages with 18 of positions of manager and above
being held by non-white. Females represent 3 out of 7 the Executive Management
team. Specific training is given to all employees in respect of key policies
including online training videos and in person equal opportunities and
diversity and health and safety training. An analysis of Directors, managers
and other employees by gender as at 31 December 2023 is as follows:
Male Female
Directors 4 1
Group Management 14 13
Production 19 2
Administration 5 11
Sales and Technical 20 20
Total 62 47
Equal opportunities
Anpario is committed to equality of opportunity for all of its current and
prospective employees, and we ensure that we treat people in a fair and
equitable manner.
The Group considers applications for employment from disabled persons equally
with those of other applicants having regard to their ability, experience, and
the requirements of the job. Where existing employees become disabled,
appropriate efforts are made to provide them with continuing suitable work
within the Group and to provide retraining if necessary.
Training and development
Anpario support a motivated and highly skilled workforce, where talent is
nurtured, and opportunities created for all. Our belief in solving problems
from new perspectives using science, experience and technology continues to
drive positive change to our ways of working.
We recognise the importance of developing talent within our business through
continuous learning and development. This is a key part of our succession
planning and preparing our business for the future to ensure that we retain
key individuals, develop high potential and future business leaders. We aim to
develop and promote from within where possible and three members of our
Executive team commenced at Anpario straight from school or university.
Employees are encouraged to further develop their skills and we provide
appropriate training to support our people and grow our organisational
capabilities. Anpario currently:
- recruits graduates and doctorates in disciplines such as
biosciences, accountancy, law and HR;
- works closely with several global universities on joint
scientific initiatives;
- sponsorship of prestigious Nuffield training for technical and
sales staff;
- provides ongoing professional training support, extensive
coaching and management development programmes;
- provides financial and study leave for professional and work
related qualifications; and
- has several apprentice places.
We value long service and retaining staff is fundamental to our success and
the creation of a strong, robust business. Anpario has a wealth of long
serving employees across its global operation, these key staff continue to
advance and develop within the business and play a major part in nurturing
future Anpario talent.
Percentage of Employees with Extended Length of Service:
5 years + 52%
10 years + 20%
15 years + 6%
Community Engagement
We believe in contributing and enriching the communities in the which we
operate by employing and offering development opportunities to local people.
We encourage active participation by our employees in initiatives that support
our local communities, through social, educational, and charitable
contributions. Anpario supports charities and local communities through
donations and volunteering. We believe it is important to give back and serve
local people and their communities, contributing to positive and measurable
social change.
In 2022 Give Something Back Volunteer Days Scheme was introduced globally,
with all employees entitled to one paid day release a year to volunteer at a
charity of their choice.
Our charity of the year chosen for 2023 is Dementia UK support and provide
life-changing care for families affected by all forms of dementia, including
Alzheimer's disease. Our staff supported several fundraising events, bake
sales and the marketing team completed a virtual walking challenge from Lands
End to John O'Groats in April raising £1,287.
Our Charity of the year for 2024 chosen by staff nomination and voting is Save
the Children.
The Anpario Green Team
Our staff are key to advancing processes and initiatives that improve our ways
of working and protect the planet. Through our "Green Team" activities we
encourage participation and raise awareness across our entire workforce to
initiate more sustainable ways of working throughout the business. Through
ongoing commitment of our team and cross functional projects we aim to improve
our sustainable practice with current objectives including: production
efficiency improvements, identify new "Ways of Working" to reduce waste in
manufacturing our products and office wastage reduction.
Planet
In aligning with UN SDG's Anpario is committed to:
- driving global protein production and support our customers to
build strong sustainable businesses, without negatively impacting future
generations;
- minimise impact of our global operations on the environment;
- continuous product innovation; and
- improving our supply chain's environmental, social and ethical
practices.
Anpario seeks to optimise animal protein production by using sustainable
natural resources for the benefit of animals, our customers and human health.
Our ongoing commitment is to support, influence, and assist farmers and food
chain producers to switch to healthier more sustainable feed ingredients,
which will deliver greater global food security and a reduction in feed
poverty. We partner with government, industry and leading research bodies
globally. Together we advance product innovation and create long-term
sustainable solutions, helping to maintain animal health and optimise
nutrition throughout the supply chain. Combatting diseases that can destroy
animals, impact welfare and livelihoods, without negatively impacting the
environment, is key to our approach.
Our innovative products work in harmony with the animals' biology to promote
healthy growth and demonstrate value to the animals fed directly throughout
all life stages and indirectly to their progeny; and ultimately within the
human food chain. This contributes to the more efficient use of feed
ingredients, reduces environmental impact and supports responsibly produced
food.
Underpinning Planet objectives is a core strategy "Anpario's 4R's" a programme
to reduce antibiotic use in animal production through "Review, Reduce,
Replace, Responsibly" which supports our customers to reduce reliance on
antibiotics, whilst maintaining efficient production using natural sustainable
solutions. Our products can replace harmful and outmoded technologies such as
formaldehyde and zinc oxide used for antimicrobial control in the feed, and
help reduce reliance on antibiotic use in animal production thus improving and
safeguarding both animal and human health. The patent attained for
Orego-Stim® in reducing the proportion of bacteria and antimicrobial
resistance, when added to the diets of young cattle and also the patent of our
flagship toxin-binder product, Anpro® are examples of how Anpario is
providing environmentally safe and sustainable solutions for the world's
population.
Helping Customers to Reduce Carbon Footprint
Anpario is one of the leading companies helping global livestock producers to
meet environmental and sustainability challenges and contributing to the
research and development progress that the agricultural livestock industry is
achieving in improving its carbon footprint and greenhouse gas emissions
(GHG's). Anpario prides itself on being a low carbon manufacturer of animal
feed additives, with two thirds of sales from products which can be described
as from sustainable sources. These products are also the Group's fastest
growing product categories. Furthermore, our products help producers to be
more efficient in the resources they use by improving feed efficiency by
supporting gut health thus optimising nutrient utilisation. Use of
Orego-Stim® in chicken meat production Anpario led trials have shown on
average a 7% improvement in feed conversion efficiency.
Anpario's 100% natural oregano essential oil product, Orego-Stim®, has also
been shown to support greener egg production by improving overall egg
production, hen liveability and feed efficiency. Meta-analysis from global
trials show on average '8 Extra Eggs' per hen improvement (2.2% per hen) when
fed Orego-Stim®.
Optomega® Algae is a new, micro-algae derived, Docosahexaenoic acid (DHA)
supplement for use in all species including aquaculture, targeted at breeding
animals and producers supplying enriched meat, milk and eggs containing higher
levels of omega-3 fatty acids. The product is 100% natural, from a sustainable
source. Furthermore, preliminary data from an in vitro study at the University
of Reading suggests that dairy cows fed Optomega® Algae can reduce methane
output by 7% in 24-hour period. It is well known that supplementing dairy
rations with DHA supports cow fertility, reducing replacement frequency in the
dairy herd supporting lifelong milk production and contributing to carbon
footprint reduction.
Orego-Stim® Forte a proprietary blend of active ingredients including
Orego-Stim® for use in aquaculture, has been shown to benefit producers of
both shrimp and fish through improvement of gut health and reduction in
pathogens leading to improved liveability and growth performance. Orego-Stim®
Forte is proven to support producers wishing to reduce reliance on antibiotics
in production.
Anpario has collaborated with a long-standing customer in India where
Orego-Stim® is recognised as a leading phytogenic product to enable them to
blend Orego-Stim® locally under licence which whilst helping to speed up
sales growth in the region and offer greater access to new market segments
will reduce transportation requirements.
Partnerships and Accreditations
Anpario partners with organisations that work to inspire and enable cutting
edge science and sustainable farming that is prosperous, enriches the
environment and engages communities. These partnerships help to assist with
our goals and work with our customers to achieve optimum animal performance
through sustainable, natural solutions.
Anpario has been honoured with the first ever King's Award for Enterprise,
recognised for excellence in Sustainable Development. Anpario is one of 148
organisations to be recognised with a King's Award for Enterprise, 15 of which
received the award for Sustainable Development. The King's Award for
Enterprise is the UK's most prestigious business accolade, designed to
recognise and encourage the achievements of UK.
We retain key industry quality accreditations, UFAS and FEMAS certifications
which are subject to rigorous independent audits which provide assurance of
meeting highest quality products, supply chain partners and operational
processes.
We hold organic farming approvals in numerous global territories, required by
regional certifying bodies to permit the use of several of our key products in
organic production systems.
Work is progressing alongside industry bodies and peers to enable us to seek a
recognised measure of product carbon footprint. We are a member Centre of
Innovation Excellence in Livestock (CIEL) a collaboration of major research
and industry players in livestock production.
Anpario continues to support Vision 365, which is the new 10-year plan for the
International Egg Commission (IEC) and supported by the United Nations and
aligned with SDG's. Eggs are an affordable, nutritious, and low impact food
source and the plan aims to develop the nutritional reputation of the egg on
an international scale and to accelerate global average egg consumption per
capita to 365 eggs per annum from 165 today.
We work with suppliers who share our aspiration to deliver high quality,
economic products without exploiting or damaging the environment. Our key
partners share the same ethos and commitment to natural based farming
solutions, including circularity in production with no use of external
resources except rainwater, green energy and zero use of chemical pesticides.
Anpario's ambition is to cease to consume finite materials that cannot be
renewed or replenished, using only raw materials from common minerals and
plants with plentiful natural resources. For example:
- Oregano oil used in the production of Orego-Stim® is unique to
Anpario and grown using organic, pesticide-free principles.
- Microalgae used in the production of Optomega® Algae is grown
using sustainable principles from natural waste of existing sugarcane
production processes. The waste sugarcane is also used to produce energy to
power the factory.
Anpario has ISO14001 certification, an internationally recognised standard for
Environmental Management Systems which provides a framework to identify,
manage, monitor and control environmental processes. Our membership of
Supplier Ethical Database (SEDEX) provides a high-level transparency of
operational standards, employment practices and corporate ethics.
Anpario will only engage with suppliers operating within international
regulations who are capable of meeting our high specification and operate
rigorous quality standards quality standards. Due diligence is undertaken for
assurance that all applicable ethical labour, trade laws and regulations are
complied with including the requirements of the UK Bribery and Modern Slavery
Acts. Anpario's employees and partners are contractually bound by its Code of
Conduct.
Operational Impact
We are focused on minimising the impact of our operations on the Planet and
aim to reduce our own carbon emissions, whilst also helping our stakeholders
to do the same. Working with the UK Government and the Environment Agency our
industry trade association, Agricultural Industries Confederation (AIC), has
set out a road map for a sustainable food chain and an open partnership across
the industry to achieve the transition to Net Zero Carbon (NZC) by 2050.
Anpario's ambition is even more ambitious to achieve NZC by 2030* and have
started to implement plans to achieve this.
Operational practices are kept under continuous review to drive further
improvements in efficiency, to eliminate waste, reduce energy consumption and
our carbon footprint. Examples include:
- solar panels generate electricity for use at our plant in
Nottinghamshire reducing our reliance upon fossil fuels and also feeds back
into the grid;
- almost all of our carrier materials are supplied in bulk and
directly added from silos to minimise packaging waste;
- liquid ingredients are stored in bunded storage silos;
- pre-used reconditioned and cleaned intermediate bulk containers
(IBC's) used for packaging and supply of bulk liquids;
- product and material waste is collected by a waste contractor
and environmentally recycled;
- our bottling plant produces liquids in 100% recyclable plastic
bottles;
- packaging design is constantly reviewed resulting in
improvements such as a recent reduction box size;
- dust extraction and recycling system minimises dust in the
production area and prevents emission into the environment;
- automated palleting system has reduced forklift movements; and
- investment in additional warehousing on site to reduce packaged
raw material movements in and out of third party storage.
We are dedicated to driving continuous improvement and targeting operational
efficiency though our production facility and committed to developing and
monitoring carbon reducing measures throughout our operations, benchmarking to
reduce waste, and emissions to land, air and water. Positive environmental
impact assessments are expected for any new operational investments submitted
for approval and alignment with our clear goals and ESG strategy which is
focused on Net Zero Operations by 2030*;
*Scopes 1 and 2 plus Scope 3 relating to group business travel & waste.
Energy Consumption & Carbon Emissions
Measurement of energy consumption & carbon emissions by businesses is made
universal by categorising into 3 areas:
Scope 1 - This relates to emissions relating to: stationary consumption i.e.
fuel consumption used in our operations (to produce electricity, steam, heat
or power) and mobile consumption by our own vehicles, and emissions to the
air.
Scope 2 - These are the emissions we create indirectly - like the electricity
or energy use for heating and cooling buildings, being produced on our behalf
by energy suppliers.
Scope 3 - In this category go all the emissions associated, not within the
business itself, but those emissions for which the organisation is indirectly
responsible in its supply chain. e.g., associated with the products from our
suppliers and to the use of our products by our customers. This is an area in
which we are in the process of gathering data and setting targets in
collaboration with our stakeholders.
baseline year prior year-on-year current year cumulative
year
2019 2022 change % change 2023 change % change
Scope 1 15.3 4.5 (2.8) (62%) 1.7 (13.6) (89%)
Scope 2 163.9 72.8 (27.9) (38%) 44.9 (119.0) (73%)
GHG emissions in tCO(2)e 179.2 77.3 (30.7) (40%) 46.6 (132.6) (74%)
Group sales £m 29.1 33.1 (2.1) (6%) 31.0 1.9 7%
Intensity (t tCO(2)e: per £m sales) 6.2 2.3 (0.8) (35%) 1.5 (4.7) (76%)
Energy use in kWh:
Natural Gas 51,433 17,317 (11,512) (66%) 5,805 (45,628) (89%)
Electricity 641,366 376,619 (159,949) (42%) 216,670 (424,696) (66%)
Waste and packaging
Our aim is to maximise the value of the resources we use and rely on, reduce
all waste being generated across the Group and divert waste away from
landfill. We place specific emphasis on the type of packaging used to protect
our products and ensure as far as possible the use of recyclable materials.
The Group continues to invest in infrastructure and management systems to
reduce waste and packaging.
The amount of waste generated in the year was reduced by 79 Tons (25%), with a
cumulative reduction from the 2019 baseline year of 246 Tons (51%).
Water
Our water consumption is low compared to manufacturing industries due to the
nature of our formulations and production systems. With increasing pressure on
this shared resource, we are mindful of the importance of protecting water
sources and are committed to using water as efficiently as possible. We
exercise extreme care to ensure that all waste water complies with relevant
legislation and the Group continues to invest in infrastructure and management
systems to minimise potential spillages or other forms of water contamination.
We continuously look for ways to conserve and re-use our water volumes and are
currently investigating initiatives to further reduce our reliance on water
resources.
The amount of water consumed in the year was reduced by 268 cubic metres
(27%), with a cumulative reduction from the 2019 baseline year of 1,145 cubic
meters (44%).
Delivery and Freight
Anpario's products are delivered through distribution channels and direct to
customer's using third party haulage and global freight services. We note that
there are carbon emissions associated with the delivery of our products,
however, this is offset by the feed efficiency and improved liveability gains
that our products make for our customers.
Promise
Anpario is committed to:
- honest, ethical, and responsible practice;
- positive engagement and partnerships;
- best practice, governance and stewardship; and
- helping customers build strong and sustainable businesses.
Anpario recognises the importance of corporate social responsibility. It is
essential to our reputation that our team offer honest and open advice,
matched by the integrity and provenance of our products. Anpario's positive
culture ensures honesty, ethical practice and responsibility is instilled into
all activity across the business. "Do the Right Thing" is a fundamental
message that creates a sound base to communicate our cultural guidance and
code of conduct throughout the entire group. Our Code of Conduct represents
our commitment to our values, to doing the right thing, personally and
professionally, and outlines the expected standards by which Anpario leaders
and employees should work in the delivery of their duties, across all job
functions, departments, and global locations in which we operate.
Policies and guidance are provided to all staff on expected behaviours at the
point of induction and fortified through training and appraisal procedures.
Compliance to the Anpario Code of Conduct is required from all employees and
businesses partners alike with a zero-tolerance policy to transgressions
whilst also facilitating whistleblowing internally and externally.
Anpario assures safety of its products, absolute transparency and traceability
of raw materials, and compliance with international regulations through
rigorous internal control processes and quality standards.
Leadership
Anpario promises to lead by example and consistently promote a culture of
integrity by making ethical decisions and acting responsibly and honestly in
everything we do whilst striving for excellence in our business objectives.
Our leaders understand the importance of our ethics framework to safeguard
best practice and excellence in governance and stewardship. The following
measures help to ensure compliance:
- the Board sets overall business strategy and plans which include
key ESG initiatives;
- the Board identifies key risks and opportunities which are
regularly reviewed and updated;
- Anpario's Board structure is in line with best practice and
Corporate Governance Codes, including independent Chair and Senior Independent
Director;
- the Board has clear and transparent division of roles;
- performance related incentives are dependent on achievement of
strategic business and ESG objectives; and
- business continuity and emergency response plans are in place
and regularly reviewed by the Board to ensure effective action and
communications.
Shareholder Delivery and Stewardship
We maintain strong relationships with shareholders, ensuring they understand
our strategy, progress and performance and that we understand their views and
address any concerns. Anpario's Promise to our shareholders is to consistently
strive to increase corporate value via best business practices and to produce
healthy returns and profit growth and ensure:
- regular informative communication through investor roadshows,
meetings and presentations;
- regular news flow on key developments in the business;
- engagement with investors regarding executive remuneration,
sustainability issues and Board changes;
- adherence to Aim Rules for Companies and compliance with Quoted
Companies Alliance Corporate Governance Code;
- appointment of external auditors who are tendered on a periodic
basis and report to the Audit Committee;
- Anpario's Board and its committees are chaired by independent
non-executive directors; and
- regular Board training on AIM Rules and Market Abuse Regulation.
Group Policies
We establish and communicate our policies to all staff throughout the group
through induction training using video and provide regular updates for all
staff.
Anti-Bribery and Anti-Corruption policy
We are transparent and compliant with all applicable laws and we ensure that
our employees and our external business partners are aware of their
responsibilities, this includes providing appropriate training and guidance.
We expect each individual acting on Anpario's behalf to be responsible for
maintaining our reputation by conducting business honestly, transparently,
professionally and ethically. Our Anti-Bribery and Anti-Corruption policy and
training outlines our zero tolerance and articulates that no employee or
representative of any Group business is to offer or accept any bribe,
including facilitation payments, or engage in any form of corrupt practice.
Human Rights
We are committed to respecting human rights and labour practices in our
operations and supply chains and recognise the importance of operating in an
ethical and responsible manner. The Group has procedures including a
requirement for suppliers to accept our stance in relation to preventing
Modern Slavery. Employees are given awareness training as part of their
induction programme with updates provided to all employees as appropriate. We
do not tolerate the use of forced or child labour, in any operations connected
with the Group.
Whistle-blower facilitation
It is our policy to encourage colleagues or external business partners to
speak up if they have any concerns about wrongdoing in the workplace. Any
employee who raises their concerns in good faith will be supported for doing
so and will be protected from retaliation. We have a number of reporting
channels through which concerns can be confidentially raised both informally
or formally through our grievance procedure and to our Human Resources Team or
any Board member. In the event of a concern being raised we promise to take it
extremely seriously and carry out an independent investigation as appropriate
to validate the complaint, following which the relevant process is
implemented, with oversight and reporting through to the case being resolved
or closed.
Anpario plc has had no formal whistleblowing cases reported during the year.
In addition to the Code of Conduct the Group's Policies which are available on
the website and internal server include:
- Sustainability Policy
- Anti-bribery and Anti-Corruption Policy
- Modern Slavery Policy
- Whistleblowing Policy
- Supplier Selection and Procurement Policy
- Health and Safety Policy
- Equal Opportunity and Dignity at Work
- Dealing with Claims of Unlawful Discrimination Policy.
Directors' report
The Directors present their Annual Report and audited consolidated financial
statements for the year ended 31 December 2023.
The Directors believe that some of the requisite components of this report are
set out elsewhere in the Annual Report and/or on the Company's website,
https://www.anpario.com/
(https://url.avanan.click/v2/___https:/www.anpario.com/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjphMWJmOjZlZDRlNjA2MWE2N2M4OTE2YmI4N2M2NGU4ZjIwMDFiNWZiMTA1OWZlM2IwOGI1M2QwMzM1ODVmNGFkMmQ5MWI6cDpU)
. The detail below sets out where the necessary disclosures can be found.
Incorporation
Anpario plc is a public company traded on the Alternative Investment Market
("AIM") of the London Stock Exchange and is incorporated in the United Kingdom
and registered in England and Wales, 03345857. The Company's registered office
is Manton Wood Enterprise Park, Worksop, Nottinghamshire, S80 2RS, England.
Principal activity
Anpario plc ("the Company") and its Subsidiaries (together "the Group")
produce and distribute natural feed additives for animal health, hygiene and
nutrition. A review of the performance and future development of the Group's
business is contained in the Chairman's Statement, Chief-Executive Officer's
Statement and Financial Review set out earlier in this Annual Report.
Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group has adequate resources
to continue in operation for the foreseeable future. The Group is profitable
and expects to continue to be so, there has been an increase in working
capital through the year to manage supply-chain risks, however these pressures
are now easing and the Group has significant level of cash resources.
Accordingly, the financial statements have been prepared on a going concern
basis, more detail can be found in note 2.1 of the financial statements.
Results and dividends
The financial results for the year ended 31 December 2023 are set out in the
consolidated financial statements later in this Annual Report and summarised
in the Financial Review earlier in the Annual Report. The profit for the year
after tax was £2.5m (2022: £3.3m).
The Directors propose a final dividend of 7.50p per share (2022: 7.35p) making
a total of 10.70p per share for the year (2022: 10.50p), amounting to an
expected total dividend of £1.8m (2022: £1.9m). The total dividend amount
paid varies according to the amounts due to employees under the Joint Share
Ownership Plan ("JSOP") and depends on the share price at the dividend
ex-date. More information can be found in note 11 of the financial statements.
Group research and development activities
The Group is continually researching and developing new products. Details of
expenditure incurred and impaired or written off during the year are shown in
the note 4 of the financial statements. During the year, £309,000 (2022:
£528,000) was capitalised as development projects or product brands with
£63,000 (2022: £98,000) expensed to the income statement. In the year,
following annual review processes, an impairment of £399,000 (2022: £45,000)
was identified.
Directors
The Directors during the year under review were:
Non-Executive Directors
Matthew Robinson Non-Executive Chairman (previously Non-Executive Director until 29 June 2023)
Tim Pollock Non-Executive Director (appointed 1 August 2023)
Kate Allum Non-Executive Chairman (resigned 29 June 2023)
Executive Directors
Richard Edwards Chief Executive Officer
Karen Prior Corporate Responsibility Director and Company Secretary
Marc Wilson Group Finance Director
The Board regards the Non-Executive Directors as being independent. The
biographies and roles of all Directors and their roles on the Audit,
Remuneration and Nomination Committees are set out earlier in this report.
Details of the Directors' interests in the shares of the Company are provided
in the Directors' remuneration report.
Employees
Details of how the Directors have engaged with employees are set out in the
Section 172 report. The Group's policies in relation to equal opportunities
are explained in the people section of the Environment and Social
Responsibility Report.
Stakeholder engagement
Details of how the Directors have engaged with it's stakeholder groups are set
out in the Section 172 report.
Indemnities
By virtue of, and subject to, Article 154 of the current Articles of
Association of the Company, the Company has granted an indemnity to every
Director, alternate Director, Secretary or other officer of the Company. Such
provisions remain in force at the date of this report. The Group has arranged
appropriate insurance cover for any legal action against the Directors and
officers.
Share capital
As at 31 December 2023, the issued share capital of the Company as 20,063,131
Ordinary Shares of 23p each. Details of the share capital as at 31 December
2023, and movements during the year, are shown in note 23 of the financial
statements.
During the year a Tender Offer was undertaken to purchase 4,000,000 Ordinary
Shares at a price of 225 pence per Ordinary Share, this was concluded on 7
July 2023. All 4,000,000 Ordinary Shares purchased were cancelled on the same
day, 7 July 2023.
The Company also cancelled 440,388 Ordinary Shares held in treasury on 7 July
2023. As at 31 December 2023, the Company holds nil (2022: 440,388) Ordinary
shares of 23p in treasury.
During the year 50,000 (2022: 177,338) Ordinary shares of 23p each were issued
pursuant to the exercise of share options. During the year the Company issued
nil (2022: 600,000) Ordinary shares of 23p at market price to the Trustees of
the Anpario plc Employees' Share Trust.
A Special Resolution will be proposed at the AGM to renew the Directors'
limited authority last granted in 2023 to make market purchases of Ordinary
shares in the capital of the Company.
The closing share price on 31 December 2023 was 257.50p per share (31 December
2022: 500.00p per share).
Substantial shareholdings
At 29 February 2024, analysis of the share register showed the following
holdings of 3 per cent or more of its issued share capital:
Ordinary Shares (000) % held
JTC plc 3,650 18.0
Unicorn Asset Management 1,865 9.2
Interactive Investor 1,552 7.6
Gresham House Asset Management 1,399 6.9
Hargreaves Lansdown Asset Management 1,298 6.4
BGF 811 4.0
James Sharp 720 3.5
Foresight Group 616 3.0
In the listing above the holdings of JTC plc represent the Anpario plc
Employees' Share Trust.
Independent auditor
The auditor, BDO LLP, has indicated its willingness to continue in office and
a resolution seeking to re-appoint BDO LLP as the Group's auditor will be
proposed at the AGM.
Stockbrokers
On 23 May 2023, Shore Capital and Corporate Limited were appointed as
Nominated Adviser and Shore Capital Stockbrokers Limited as Sole Broker. Prior
to which, Peel Hunt LLP had acted for the Company in both roles.
Financial risk management
Details of the Company's financial risk management policy are set out in note
2.21 of the financial statements.
Statement of Directors' responsibilities
The directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the Group
financial statements in accordance with UK adopted International Accounting
Standards and the Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. The Directors are also required
to prepare financial statements in accordance with the rules of the London
Stock Exchange for companies trading securities on AIM.
In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and accounting estimates that are reasonable and
prudent;
- for the Group financial statements, state whether they have been
prepared in accordance with UK adopted international accounting standards,
subject to any material departures disclosed and explained in the financial
statements;
- for the Parent Company financial statements, state whether
applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the company's website is the responsibility of the directors. The directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
Statement of disclosure to auditor
So far as the Directors are aware:
- there is no relevant audit information of which the Company's
auditor is unaware; and
- they have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit information
and to establish that the Company's auditor is aware of that information.
The Directors' report was approved by the Board of Directors on 20 March 2024
and is signed by order of the board:
Karen Prior
Company Secretary
20 March 2024
Report of the Remuneration Committee
Foreword
On behalf of the Board, I am pleased to present the Remuneration Committee's
report for the year ended 31 December 2023. The Committee continuously seeks
to ensure alignment of the strategy and values of the Company and the
interests of all shareholders. This includes the need to recruit, retain and
appropriately incentivise high calibre directors and managers to deliver the
Group's strategy.
Membership and attendance in the year
The Committee comprises solely of independent Non-Executive Directors.
Executive Directors and external advisors are invited to attend meetings as
required if thought advantageous for consideration of a particular agenda
item. The Committee is chaired by Tim Pollock, Non-Executive Director. The
other Committee member is Matthew Robinson, Non-Executive Chairman.
The Remuneration Committee meets as necessary to fulfil its objectives but as
a minimum, at least once a year. The Committee met four times during the year
ended 31 December 2023 with full attendance by the Committee members. In
addition, the Committee chose to consult with shareholders on changes to
Remuneration Policy to ensure alignment with their interest as well as Group
strategy.
Key responsibilities
The Committee is responsible for reviewing the performance of Executive
Directors as well as determining the scale and structure of their
remuneration, their terms and conditions of service and the grant of share
awards, having due regard to the interests of shareholders.
The Committee is also responsible for reviewing the overall policy in respect
of remuneration of all other employees of the Company and establishing the
Company's policy and operation of share incentive schemes.
In determining the remuneration of senior executives, the Committee seeks to
enable the Company to attract and retain executives of the highest calibre.
The Committee also makes recommendations to the Board concerning the
allocations of options to executives under the long-term incentive plan and
for the administration of the scheme.
The terms of reference of the Remuneration Committee can be found on the
Company's website www.anpario.com/aim-26/
(https://url.avanan.click/v2/___http:/www.anpario.com/aim-26/___.YXAxZTpzaG9yZWNhcDphOm86MDc4MTFhYzRlYTljZTM5OThlZDA3OThhM2Y1ZGUzYzk6NjpmZjYzOjQ5OWRjOGM3NGI0Y2FjMmNmNWU4ZDg5OGNmYzE0ZjhjNGUyNDExNWFlNWZkMTk5ODAwZTcwYThkZTQ4YTZiMmI6cDpU)
.
Key activities in the year
During the course of the year, the main activities of the Committee were:
- review of Director remuneration, following which there were no
changes to base salary or fees for the year in review;
- evaluated the structure and targets set in regards to the Annual
Bonus in light of the reduced level of performance;
- evaluated the appropriateness of new awards under the LTIP
policy in light of the reduced level of performance; and
- continued to review and evaluate talent management and
succession planning activities.
Remuneration policy for the year in review
The objectives of the remuneration policy are to ensure that the overall
remuneration of senior executives is aligned with the performance of the
Company and preserves an appropriate balance of annual profit delivery and
longer-term shareholder value.
The Committee keeps the remuneration policy, in particular the need for share
ownership guidelines for Executive Directors, regularly under review and will
take action whenever deemed necessary to ensure that remuneration is aligned
with the overall strategic objectives of the Company.
The Committee seeks advice, if appropriate, from independent advisors where
required on remuneration related matters.
Executive Directors
Element and purpose Operation
Base Salary
To provide a competitive base salary to attract and retain Executive Directors Base salaries are usually reviewed on an annual basis and consider:
of a suitable calibre to deliver the Group's growth strategy.
- individual experience and skills;
- development in the role;
- changes in responsibilities or the size or complexity of the business;
and
- competitive salary levels and market forces.
Benefits
To provide a competitive benefits package as part of total remuneration. Executive Directors receive private medical insurance, critical life and death
in service insurance and a company car allowance. Other benefits may be
provided based on individual circumstances as considered appropriate by the
Committee.
Pension
To provide a competitive retirement benefit. Executive Directors are entitled to receive contributions towards defined
contribution pension plans of up to 10% of their base salary. It may be
permitted to take the benefit as cash in lieu of pension contributions where
appropriate.
The Company will also pass on part of the Employers' National Insurance
savings made that result from any pension salary sacrifice's made by Executive
Directors, in the form of increased pension contributions.
Annual bonus
The incentivise and reward based on the achievement of annual financial Executive Directors' annual bonuses are based on financial performance targets
objectives. which are set each year by the committee. For Executive Directors, the maximum
bonus opportunity is up to 100%. The Committee has discretion over the amounts
awarded and may make consideration to other corporate activities such as
acquisitions and disposals aligned with shareholder returns.
The target for the year in review was to achieve a minimum of 15% growth in
adjusted EBITDA to £6.0m, which would give rise to an award equivalent to 25%
of base salary. Performance above this target would lead to higher awards,
increasing on a straight-line basis, up to a maximum of 100% of base salary
for adjusted EBITDA growth of 34% to £7.0m in the year.
In-line with that structure and award calculation the Committee has determined
that there will be no bonus awarded to Executive Directors for 2023.
LTIP
To incentivise and reward achievement of sustained and long-term business The Executive Directors receive remuneration under the following term
performance and create alignment with shareholders. incentive plans: Enterprise Management Scheme ("EMI" which is now closed;
Joint Share Ownership Plan ("JSOP"); Performance Share Plan ("PSP") and Save
As You Earn Scheme ("SAYE"). All of which have a three-year vesting period.
EMI, SAYE and JSOP Schemes
The EMI and SAYE are market value option plans and as such reward growth in
the share price from the date of the award. In the case of the JSOP scheme the
final exercise price of the award is equivalent to share price on the date of
grant plus an additional carrying cost, equivalent to simple interest, of 4.5
per cent per annum. As such this scheme only rewards growth in excess of
expected equity market returns.
The Joint Share Ownership Plan ("JSOP") and the Anpario plc Employees Shares
Trust ("the Trust") were established and approved by resolution of the
Non-Executive Directors on 26 September 2011. The JSOP provides for the
acquisition by employees, including Executive Directors, of beneficial
interests as joint owners (with the Trust) of Ordinary Shares in the Company
upon the terms of a Joint Ownership Agreement ("JOA").
The terms of the JOAs provide, inter alia, that if jointly owned shares become
vested and are sold, the proceeds of sale will be divided between the joint
owners so that the participating Director receives an amount equal to any
growth in the market value of the jointly owned Ordinary shares above the
initial market value, less a "carrying cost" over the vesting period
(equivalent to simple interest at 4.5 per cent per annum on the initial market
value) and the Trust receives the initial market value of the jointly owned
shares plus the carrying cost. Jointly owned Ordinary shares will become
vested if the participant remains with the Company for a minimum period of 3
years.
PSP Award
Under the PSP award, the maximum opportunity is nil-cost options to the value
of 100% of base salary and is subject to malus and clawback provisions.
Performance is assessed against a rolling three-year performance period and
subject to the achievement of performance targets set by the Remuneration
Committee.
The 2022 PSP award is subject to the achievement of three performance
conditions, being a financial target representing 75% of the total award and
two further ESG components representing the remaining 25% as described below.
Diluted adjusted earnings per share:
75% of the PSP award is weighted on the achievement of diluted adjusted
earnings per share growth targets over a three-year period. The minimum growth
required is 6% per annum for a 18.75% vesting of the overall PSP award, on a
pro-rata straight-line basis to a maximum 75% vesting of the overall PSP award
for annual growth of 16%.
Reduction of Carbon Intensity:
The primary objective for ESG based targets is to reduce Carbon Intensity
in-line with our ambitions to achieve net-zero emissions by 2030. 15% of the
PSP award is weighted on the reduction of annual Carbon Intensity cumulatively
since the year ended 31 December 2019. The minimum reduction required is 63%
per annum for a 4.5% vesting of the overall PSP award, on a pro-rata
straight-line basis to a maximum 15% vesting of the overall PSP award for a
cumulative reduction of 70%.
Other ESG Objectives:
The final potential 10% of the PSP Award is based on the achievement of
progress towards other ESG objectives. This will be based on a qualitative
assessment by the Remuneration Committee which will consider a range of
quantitative and qualitative inputs, including but not limited to: diversity,
equality and inclusiveness; training and development of staff; reductions in
waste and water usage; health and safety; and sustainable business operations.
Non-Executive Directors
The table below sets out the elements of Non-Executive Directors' remuneration
as well as the purpose and operation.
Element and purpose Operation
Fees
To attract and retain Non-Executive Directors of a suitable calibre with the Remuneration of the Non-Executive directors is determined by the Chairman and
required skills and experience. the Chief Executive Officer. The Non-Executive Directors are not entitled to
annual bonuses or employee benefits and their fees are subject to annual
review.
The Chairman's remuneration is determined by Remuneration Committee in
conjunction with the Chief Executive Officer. However, the Chairman is not
entitled to vote on the matter.
Fees are reviewed on an annual basis and consider:
- individual experience and skills;
- changes in responsibilities or the size or complexity of the business;
and
- competitive salary levels and market forces.
Reimbursements are made for business related expenses.
Additional Policy Notes
Shareholding requirements
In-employment shareholding requirements:
The Executive Directors are expected to build and maintain a holding of shares
to the value of 100% of salary. Executive Directors are normally expected to
retain all of the net of tax number of shares they receive through share
incentive plans until the 100% of salary shareholding requirement has been
met.
Post-employment shareholding requirements:
For the first 12 months following cessation of employment and in respect of
awards made after 2020, an Executive Director is normally expected to retain
shares equal to 100% of the in-employment guideline and in the following 12
months, retain shares equal to 50% of the in-employment guideline.
Dilution limit policy
As previously announced by the Company on 16 March 2022, and following a
consultation process with shareholders, the Company adopted a policy on
dilution limits, in which whilst the potential dilution limit (including all
share awards granted under the Company's employee share incentive plans since
January 2015) was increased to 18%, this potential dilution limit was expected
to reduce by 2025 to 15% of the ordinary share capital of the Company viewed
over a 10-year rolling period (the "Dilution Limit Policy").
The Tender Offer completed in 2023 and subsequent cancellation of successfully
tendered Ordinary Shares impacted the Dilution Limit Policy, as there was a
reduction in the issued ordinary share capital upon which the Dilution Limit
Policy is based. This had the effect of increasing the potential dilution
limit to 20% (from 18% per cent) in the short term, before subsequently
falling (by 2026; previously 2025) to a limit of 15% of the ordinary share
capital of the Company viewed over a 10-year rolling period.
Anpario operates an Employee Share Trust. When awards issued under the Trust
are exercised then any shares retained by the trustee shall not be included
for dilution purposes if re-issued for further awards. This is because they
have already been included for dilution purposes at the date of initial grant.
Remuneration in the year
Executive Directors
The remuneration of each Director for the year ended 31 December 2023 and the
prior year is set out in the table below.
Richard Edwards Karen Prior(1) Marc Wilson
2023 2022 2023 2022 2023 2022
£000 £000 £000 £000 £000 £000
Base salary 250 250 53 60 140 140
Taxable benefits 10 10 5 9 8 9
Pension 25 25 2 6 14 16
Annual bonus - - - - - -
Share-based payment(3) - - - - - -
Share options vested(3) - - - - - -
Total remuneration 285 285 60 75 162 165
Of which:
Fixed remuneration 285 285 60 75 162 165
Variable remuneration - - - - - -
1 Karen Prior's remuneration is adjusted to reflect part-time service.
Non-Executive Directors
The remuneration of each Non-Executive Director for the year ended 31 December
2023 and the prior year is set out in the table below.
2023 2022
£000 £000
Matthew Robinson(1) 43 35
Tim Pollock(2) 15 -
Kate Allum(3) 25 58
Ian Hamilton(4) - 10
Total fees 83 103
1 Appointed as Chair from 29 June 2023.
2 Appointed 1 August 2023.
3 Resigned 29 June 2023
4 Resigned 17 April 2022
Ad hoc payments
There were no ad hoc payments to any Directors in the year (2022: £nil).
Payments to past Directors
There were no payments to past Directors in the year (2022: £nil).
Loss of office
There were no loss of office payments made in the year (2022: £nil).
Director's share interests and awards
Share interests
The interests of the Directors who served during the period, as at 31 December
2023, in the Ordinary shares of 23p each in the Company were as follows: -
31 Dec Interests Interests disposed 31 Dec Shareholding guidelines Guidelines
2022 acquired in the year
2023 met
Number in the year
Number
Richard Edwards 168,396 35,000 - 203,396 100% Yes
Karen Prior 157,445 - - 157,445 100% Yes
Marc Wilson 11,676 3,275 - 14,951 100% No
Matthew Robinson 8,600 - - 8,600 n/a n/a
There have been no changes in Directors' interests between 31 December 2023
and 20 March 2024.
Share awards
There were no share awards granted to Directors in the year (2022: 326,168).
Under the Company's long-term incentive plans the following Directors have the
right to acquire Ordinary shares of 23p each as follows.
Director Award plan Exercise price 31 Dec Options exercised Options granted 31 Dec
(pence per share)
2022 in year in year
2023
Number
Number
Richard Edwards EMI 290.00 42,400 - - 42,400
JSOP(1) 290.00 609,781 - - 609,781
JSOP(1) 245.00 740,219 - - 740,219
SAYE 322.72 5,577 - - 5,577
Karen Prior JSOP(2) 79.00 86,956 - - 86,956
EMI 290.00 42,400 - - 42,400
JSOP(1) 290.00 347,825 - - 347,825
JSOP(1) 245.00 590,219 - - 590,219
JSOP(1) 375.00 175,000 - - 175,000
SAYE 322.72 5,577 - - 5,577
Marc Wilson JSOP(1) 330.00 20,000 - - 20,000
SAYE 322.72 5,577 - - 5,577
( ) JSOP(1) 620.00 50,000 - - 50,000
( ) JSOP(1) 545.00 300,000 - - 300,000
( ) PSP(3) nil 26,168 - - 26,168
1 The exercise price upon vesting will increase by a carrying cost equivalent
to simple interest at 4.5% per annum on the option price for three years.
2 The exercise price upon vesting will increase by a carrying cost equivalent
to simple interest at 4.5% per annum on the option price until exercised.
3 Vesting is subject to performance criteria as outlined in the remuneration
policy section above.
Directors' service contracts
The Executive Directors are employed under service contracts with the Group,
these are available to view at the Company's Registered Office. The key terms
of the service contracts for the year are set out below. The service contract
of Karen Prior was updated effective from the 1 May 2023 in respect of
part-time service.
Notice period
Executive Director Position Contract Date From Company From Director
Richard Edwards Chief Executive Officer 5 November 2006 12 months 6 months
Karen Prior Corporate Responsibility Director 1 October 2009 12 months 6 months
Marc Wilson Group Finance Director 1 July 2021 12 months 6 months
Non-Executive Directors' terms of appointment
Each of the Chairman and Non-Executive Director have a letter of appointment
stating their annual fee and termination terms.
The appointments are terminable on three months written notice at any time by
either the Company or the Non-Executive Director.
Notice period
Executive Director Date of current appointment From Company From Director
Matthew Robinson 11 January 2021 3 months 3 months
Tim Pollock 1 August 2023 3 months 3 months
Tim Pollock
Remuneration Committee Chairman
20 March 2024
Audit Committee report
Composition and meetings of the Audit Committee
The Audit Committee is comprised of the two Non-Executive Directors, whom the
Board considers to be independent and is chaired by Matthew Robinson. Meetings
are also attended, by invitation, by the Group Finance Director, external
auditors and other management as appropriate.
The auditor, BDO LLP, has indicated its willingness to continue in office and
a resolution seeking to reappoint BDO LLP as the Group's auditor will be
proposed at the AGM.
The Committee meets at least twice each financial year with the external
auditors and considers any issues that are identified during the course of
their audit work. The Board is satisfied that the Committee members have
recent and relevant financial experience.
The Committee met twice during the year ended 31 December 2023 with full
attendance by the Committee members.
Role, responsibilities and terms of reference
The Audit Committee's role is to assist the Board in the effective discharge
of its responsibilities for financial reporting and internal control. The
Audit Committee's responsibilities include:
Financial reporting
Monitor the integrity of the financial statements of the Company, and to
assist the Board in ensuring that the financial statements and any formal
announcements relating to financial performance, when taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy. Ensuring that reviews are undertaken on the significant
financial reporting judgements contained in financial statement focusing
particularly on:
- the consistency of and any changes to accounting policies and
practices;
- the methods used to account for significant or unusual
transactions where different approaches are possible;
- whether the Company has followed
appropriate accounting standards and made appropriate estimates and
judgements, taking into account the views of the external auditor; and
- the clarity of disclosure in the Company's financial reports and
the context in which statements are made.
Internal controls and risk management
- keep under review the adequacy and effectiveness of the
Company's internal financial controls and internal control and risk management
systems;
- keep under review the requirement for an internal audit
function; and
- review and approve the statements to be included in the annual
report concerning internal controls and risk management.
Compliance, whistleblowing and fraud
- review the Company's arrangements for its employees to raise
concerns, in confidence, about possible wrong doing in financial reporting or
other matters so as to ensure that arrangements are in place for the
proportionate and independent investigation of such matters and for
appropriate follow-up action; and
- review the Company's systems and controls for the detection of
fraud and prevention of bribery.
External audit
Consider and make recommendations to the Board, to be put to shareholders for
approval at the AGM, in relation to the appointment, re-appointment and
removal of the external auditor. The Committee shall oversee the selection
process for a new auditor and if an auditor resigns, the Committee shall
investigate the issues leading to this and decide whether any action is
required. Oversee the relationship with the external auditor including (but
not limited to):
- recommendations on their remuneration, whether fees for audit or
non-audit services and that the level of fees is appropriate to enable an
adequate audit to be conducted;
- approval of their terms of engagement, including any engagement
letter issued at the start of each audit and the scope of the audit;
- assessing annually the external auditor's independence and
objectivity taking into account relevant UK professional and regulatory
requirements and the relationship as a whole, including the provision of any
non-audit services;
- satisfying itself that there are no relationships (such as
family, employment, investment, financial or business) between the auditor and
the Company (other than in the ordinary course of business);
- monitoring the auditor's compliance with relevant ethical and
professional guidance on the rotation of audit partner;
- assessing annually the qualifications, expertise and resources
of the auditor and the effectiveness of the audit process which shall include
a report from the external auditor on their own internal quality procedures;
- develop and implement a policy on the engagement of the external
auditor to supply non-audit services;
- discuss with the external auditor(s) before the audit commences
the nature and scope of the audit, and ensure co-ordination where more than
one audit firm is involved;
- review the findings of the audit, discussing any major issues
which arose during the audit, any problems and reservations arising from the
Final audit, and any matters the auditors may wish to discuss (in the absence
of management where necessary); and
- review the external auditor's management letter and management's
response.
The Committee regularly reviews its terms of reference and makes
recommendations to the Board for any changes as appropriate. The current terms
of reference are available on the Company's website.
Independence of external auditor
The Committee reviews the independence of the external auditor, BDO LLP on an
annual basis. It receives a detailed audit plan, from BDO LLP, identifying
their assessment of the key risks. The Committee assesses the effectiveness of
the audit process in addressing these matters through the reporting it
receives from BDO LLP.
Judgements and significant risks considered in respect to the Annual Report
The Committee assesses whether suitable accounting policies have been adopted
and whether management has made appropriate estimates and judgements. The
Committee reviews accounting papers prepared by management, which provide
details on the main financial reporting judgements.
The Committee also reviews report by the external auditor on the full year
results, which highlight and issues arising from the work undertaken. Areas of
audit and accounting risk reviewed by the Committee included:
Recognition and measurement of product development
The Group holds assets on the statement of financial position in relation to
both current research and development projects and developed products that
have resulted in commercial launches. These assets are subject to judgements
such as whether costs are eligible for capitalisation, the amortisation
periods and impairment reviews. The Committee reviewed management's accounting
papers and discussed the product portfolio with the Board along with forecast
sales and activity and was satisfied with the accounting policy in force and
with the estimates and judgements applied by management in employing this
policy.
Matthew Robinson
Audit Committee Chairman
20 March 2024
Independent auditors' report
Opinion on the financial statements
In our opinion:
- the financial statements give a true and fair view of the state
of the Group's and of the Parent Company's affairs as at 31 December 2023 and
of the Group's profit for the year then ended;
- the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
- the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Anpario Plc (the 'Parent Company')
and its subsidiaries (the 'Group') for the year ended 31 December 2023 which
comprise the Consolidated statement of comprehensive income, the Consolidated
statement of financial position, the Consolidated statement of changes in
equity, the Consolidated statement of cash flows, the Company statement of
financial position and the Company statement of changes in equity and notes to
the financial statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in the preparation of
the Group financial statements is applicable law and UK adopted international
accounting standards. The financial reporting framework that has been applied
in the preparation of the Parent Company financial statements is applicable
law and United Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC's Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the Group and the Parent Company's ability to continue to adopt
the going concern basis of accounting included:
- Obtaining an understanding of how the Directors undertook the
going concern assessment process to determine if we considered it to be
appropriate for the circumstances by way of enquiry with the Directors in
regards to who prepared the assessment and the information and individuals
consulted in the process;
- Obtaining the Directors' trading forecasts which underly the
going concern assessment and challenging them on the key estimates and
assumptions within such with a particular focus on the forecast levels of
revenue, gross profit predictions and working capital cycles, through analysis
and comparison of the forecasts with prior year actuals;
- Performing data verification and logic checks to confirm the
mathematical accuracy of the forecast model;
- Reviewing 'stress tested' sensitivity analysis to assess the
quantum of adverse variance against forecast that could be sustained without
creating material uncertainties over the going concern assessment;
- Undertaking an analysis of post year end trading results and
comparing to forecast and current year figures in order to evaluate the
accuracy and achievability of forecasts; and
- Performing a review of the disclosures in the financial
statements to ensure they are adequate, consistent with the Director's
assessment.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and the Parent Company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Key audit matters Existence and valuation of, developed product and development costs classified 2023 2022
as intangible assets.
Yes Yes
Materiality Group financial statements as a whole
£20
2,0
00
(20
22:
£24
6,0
00)
bas
ed
on
5%
(20
22:
5%)
of
a 3
yea
r
ave
rag
e
of
pro
fit
bef
ore
tax
(20
22:
3
yea
r
ave
rag
e
of
pro
fit
bef
ore
tax
).
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
We determined that the Parent Company was the only significant component
within the Group and a full scope audit was performed by the Group engagement
team.
The remaining 16 components ('the components') were not individually
financially significant enough to require a full scope audit for Group
purposes, but did present specific individual risks that needed to be
addressed in accordance with the Group audit approach. The components act as
sales offices and all purchases are made from the Parent Company, therefore,
through specific risk-focussed audit procedures over inventories, trade
receivables and cash, along with analytical review procedures we gained
sufficient audit assurance to form our opinion on the financial statements as
a whole. All work was conducted by the Group engagement team, with the
exception of year-end inventory count attendance procedures at locations in
Brazil, China, Indonesia, the Republic of Ireland, Thailand and the United
States of America. Overseas inventory count procedures were performed by other
BDO network firms, operating in accordance with instructions issued by the
Group engagement team.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Existence and valuation of developed product and development costs classified Valuation: Valuation:
as intangible assets.
(See accounting policies and Note 13 intangible assets)
The Group has a material net book value for internally developed products of We analysed the level of revenue and gross profits generated historically by
£1.6m (2022 - £1.7m) forming part of the Brands and developed products developed products through review of trading results and compared these to the
intangible asset with net book value of £3.7m (2022 - £3.4m) disclosed in carrying value of the relevant intangible asset, in order to identify evidence
Note 13. of a fall in demand or other indicators of impairment. This process allowed us
to challenge management's assessment of the expected future returns and the
anticipated life of the products.
Following consideration of impairment indicators management carried out an
impairment assessment by considering the net present value of future cash
flows generated by the products in comparison to their net book value. We assessed the reasonableness of forecast future trading assumptions by
reference to current year results and budgets and considered the sensitivity
of the estimates of future performance to material changes in the net
realisable value of each of the developed products. We checked that the
Existence: anticipated performance of the developed products was consistent with the
overall Group forecasts prepared for assessing the basis of going concern.
In addition the Group has cumulative capitalised development costs of £0.5m
(2022 - £1.2m) for products in development at the year end date. We reviewed the impairment assessment models against the requirements set out
within the relevant accounting standard and tested the integrity of the
mathematical calculations in the model.
In accordance with accounting standards in order to capitalise development
costs management is required to make certain judgements, including the stage
of development, the technical feasibility of completing the product We consulted with our internal valuation experts on the reasonableness of the
development and the commercial viability of the products discount rate applied.
These judgements determine whether development costs are eligible for Existence:
capitalisation and the period of time over which assets will be amortised.
We tested, on a sample basis, that internally generated development costs
There is also a risk of fraud through manipulation in respect of the capitalised in the year of £0.3m (2022 - £0.5m) were valid expenses, that
assessment made by management of which costs are eligible for capitalisation. they related to the development of the relevant product and further that they
met the eligibility criteria in IAS 38 to be capitalised by corroborating the
costs to supporting evidence.
Owing to the magnitude of the product development intangibles, and the level
of estimation and judgement involved in determining both the eligibility of
costs for capitalisation and recoverable amount, we determined the existence For the portfolio of projects under development, including costs capitalised
and valuation of brand, developed products and the development costs in previous years as well as the current year we made enquiries of staff
intangible assets to be a key audit matter. outside of the finance function, including the technical director, who are
involved in the development of the products in order to gain an understanding
of the development process in order to assess if the development costs should
continue to be capitalised.
Key observations:
We found the estimates and judgements made by management in valuing the
developed products and development costs intangibles were reasonable and that
costs that have been capitalised relate to projects that exist have been
appropriately capitalised.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements Parent company financial statements
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Materiality 202 246 136 226
Basis for determining materiality 5% of pre-tax profit, based on a 3 year average 5% of pre-tax profit, based on a 3 year average 5% of pre-tax profit, based on a 3 year average 5% of Parent Company pre-tax profit
Rationale for the benchmark applied Profit before tax remains the key driver of the business' value and is the
underlying driver for management's key measure of performance. Due to the
variability in the reported profit in the recent years a 3-year average has
been applied in the current year.
Performance materiality 152 190 102 170
Basis for determining performance materiality Set at 75% of materiality Set at 75% of materiality Set at 75% of materiality Set at 75% of materiality
Rationale for the percentage applied for performance materiality Our rationale is that it is the fourth year of our appointment as auditor and
the history of unadjusted differences over our period of appointment is low.
Performance materiality of 75% of financial statement materiality was
considered to give suitable level to determine the nature of and extent of
testing required.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £4,000 (2022: £5,000). We also agreed to
report differences below this threshold that, in our view, warranted reporting
on qualitative grounds.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during
the course of the audit, we are required by the Companies Act 2006 and ISAs
(UK) to report on certain opinions and matters as described below.
Strategic report and Directors' report In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Strategic report and the Directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
- the Strategic report and the Directors' report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors'
report.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the Parent Company,
or returns adequate for our audit have not been received from branches not
visited by us; or
- the Parent Company financial statements are not in agreement with the
accounting records and returns; or
- certain disclosures of Directors' remuneration specified by law are
not made; or
- we have not received all the information and explanations we require
for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors' responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's and the Parent Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
- Our understanding of the Group and the industry in which it
operates;
- Discussion with management and those charged with governance;
and
- Obtaining and understanding of the Group's policies and
procedures regarding compliance with laws and regulations
We considered the significant laws and regulations to be the applicable
accounting framework, UK tax legislation, the AIM Listing Rules and Animal
Feed product regulatory requirements.
The Group is also subject to laws and regulations where the consequence of
non-compliance could have a material effect on the amount or disclosures in
the financial statements, for example through the imposition of fines or
litigations. We identified such laws and regulations to be health and safety
legislation.
Our procedures in respect of the above included:
- Review of minutes of meeting of those charged with governance
for any instances of non-compliance with laws and regulations;
- Review of correspondence with regulatory and tax authorities for
any instances of non-compliance with laws and regulations;
- Review of financial statement disclosures and agreeing to
supporting documentation;
- Involvement of tax specialists in the audit; and
- Review of legal expenditure accounts to understand the nature of
expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material
misstatement, including fraud. Our risk assessment procedures included:
- Enquiry with management and those charged with governance
regarding any known or suspected instances of fraud;
- Obtaining an understanding of the Group's policies and
procedures relating to:
o Detecting and responding to the risks of fraud; and
o Internal controls established to mitigate risks related to fraud.
- Review of minutes of meeting of those charged with governance
for any known or suspected instances of fraud;
- Discussion amongst the engagement team as to how and where fraud
might occur in the financial statements;
- Performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material misstatement due
to fraud; and
- Considering remuneration incentive schemes and performance
targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to
fraud were:
- Manipulation of revenue recognition, particularly in the period
before the year end or across group entities as this could be used to achieve
market expectations;
- Manipulation of costs capitalised as product brands as this is
judgemental and increasing the amount capitalised improves reported profit as
referred to above in the key audit matter section; and
- Inappropriate journals posted in to the financial system to
manipulate the reported results or conceal inappropriate activity.
Our procedures in respect of the above included:
- Testing a sample of journal entries throughout the year, which
met a defined risk criteria, by agreeing to supporting documentation;
- Assessing significant estimates made by management for bias
including the existence and valuation of developed product and development
costs classified as intangible assets;
- Review of revenue nominal accounts for unusual transactions;
- Testing of a sample of transactions in December 2023 to check
that revenue had been recorded in the correct period; and
- Testing of the elimination of intra-group revenue and the
provision for unrealised profits to verify that all intra-group revenues and
profits were appropriately eliminated on consolidation.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members who were all deemed to have
appropriate competence and capabilities and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: ww.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Parent Company's members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Parent Company's
members those matters we are required to state to them in an auditor's report
and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Parent Company and
the Parent Company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
Gareth Singleton (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Birmingham, UK
20 March 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Consolidated statement of comprehensive income
for the year ended 31 December 2023
2023 2022
Note £000 £000
Revenue 3 30,998 33,103
Cost of sales (17,040) (18,967)
Gross profit 13,958 14,136
Administrative expenses (11,435) (10,576)
Operating profit 4 2,523 3,560
Depreciation and amortisation 4 1,237 1,225
Adjusting items 6 703 423
Adjusted EBITDA 6 4,463 5,208
Net finance income 9 230 121
Profit before tax 2,753 3,681
Income tax 10 (225) (378)
Profit for the year 2,528 3,303
Other comprehensive income/(expense):
Items that may be subsequently reclassified to profit or loss:
Exchange difference on translating foreign operations (221) 387
Cashflow hedge movements (net of deferred tax) 19 722 (902)
Total comprehensive income for the year 3,029 2,788
Basic earnings per share 12 13.51p 16.13p
Diluted earnings per share 12 13.45p 15.10p
Adjusted earnings per share 12 15.37p 17.81p
Diluted adjusted earnings per share 12 15.31p 16.67p
All of the results arise from continuing operations.
Consolidated statement of financial position
as at 31 December 2023
2023 2022
Note £000 £000
Intangible assets 13 10,637 11,375
Property, plant and equipment 14 4,626 4,864
Right-of-use assets 15 76 50
Deferred tax assets 16 537 859
Derivative financial instruments 19 253 153
Non-current assets 16,129 17,301
Inventories 17 6,348 9,867
Trade and other receivables 18 6,815 7,003
Derivative financial instruments 19 67 21
Current income tax assets 186 774
Short-term investments 110 1,828
Cash and cash equivalents 10,539 11,739
Cash, cash equivalents and short-term investments 20 10,649 13,567
Current assets 24,065 31,232
Total assets 40,194 48,533
Lease liabilities 21 (46) (17)
Derivative financial instruments 19 (46) (825)
Deferred tax liabilities 16 (1,762) (1,724)
Non-current liabilities (1,854) (2,566)
Trade and other payables 22 (4,046) (3,983)
Lease liabilities 21 (33) (35)
Derivative financial instruments 19 (377) (638)
Current income tax liabilities (235) -
Current liabilities (4,691) (4,656)
Total liabilities (6,545) (7,222)
Net assets 33,649 41,311
Share capital 23 4,615 5,624
Share premium 23 15,047 14,934
Capital redemption reserve 24 1,021 -
Other reserves 25 (8,577) (10,461)
Retained earnings 21,543 31,214
Total equity 33,649 41,311
The financial statements were approved by the Board and authorised for issue
on 20 March 2024.
Richard Edwards Marc Wilson
Chief Executive Officer Group Finance Director
Company Number: 03345857
Consolidated statement of changes in equity
for the year ended 31 December 2023
Share Share Capital redemption reserve Other Retained earnings Total
capital
premium
reserves
equity
Note £000 £000 £000 £000 £000 £000
Balance at 1 Jan 2022 5,446 11,547 - (6,788) 30,097 40,302
Profit for the period - - - - 3,303 3,303
Currency translation differences - - - 387 - 387
Cash flow hedge reserve 19 - - - (902) - (902)
Total comprehensive income for the year - - - (515) 3,303 2,788
Issue of share capital 23 178 3,387 - - - 3,565
Joint-share ownership plan 23 - - - (3,270) - (3,270)
Share-based payment expense 25 - - - 183 - 183
Deferred tax regarding share-based payments - - - (71) - (71)
Final dividend relating to 2021 - - - - (1,512) (1,512)
Interim dividend relating to 2022 11 - - - - (674) (674)
Transactions with owners 178 3,387 - (3,158) (2,186) (1,779)
Balance at 31 Dec 2022 5,624 14,934 - (10,461) 31,214 41,311
Profit for the period - - - - 2,528 2,528
Currency translation differences - - - (221) - (221)
Cash flow hedge reserve 19 - - - 722 - 722
Total comprehensive income for the year - - - 501 2,528 3,029
Issue of share capital 23 12 113 - - - 125
Purchase and Cancellation of Tender Offer shares 23, 24 (920) - 920 - (9,248) (9,248)
Cancellation of treasury shares 23, 24, 25 (101) - 101 1,189 (1,189) -
Share-based payment expense 25 - - - 284 - 284
Deferred tax regarding share-based payments - - - (90) - (90)
Final dividend relating to 2022 11 - - - - (1,228) (1,228)
Interim dividend relating to 2023 11 - - - - (534) (534)
Transactions with owners (1,009) 113 1,021 1,383 (12,199) (10,691)
Balance at 31 Dec 2023 4,615 15,047 1,021 (8,577) 21,543 33,649
Consolidated statement of cash flows
for the year ended 31 December 2023
2023 2022
Note £000 £000
Operating profit for the year 2,523 3,560
Depreciation and amortisation 4 1,237 1,225
Impairment/Loss on disposal of intangible assets 13 541 45
Loss on disposal of property, plant and equipment 14 11 1
Share-based payments 25 284 183
Fair value adjustment to derivatives (243) 395
Operating cash flows before changes in working capital 4,353 5,409
Decrease/(increase) in inventories 3,277 (1,661)
Decrease in trade and other receivables 163 254
Increase/(decrease) in trade and other payables 267 (2,171)
Decrease/(increase) in working capital 3,707 (3,578)
Cash generated from operations 8,060 1,831
Income tax refunded/(paid) 635 (744)
Net cash from operating activities 8,695 1,087
Purchases of property, plant and equipment 14 (277) (809)
Payments to acquire intangible assets 13 (466) (731)
Interest received 9 236 124
Realisation of/(Investment in) short-term investments 20 1,718 (25)
Net cash from/(used in) investing activities 1,211 (1,441)
Purchase of shares through Tender Offer (9,248) -
Joint share ownership plan 25 - (3,270)
Proceeds from issuance of shares 125 3,565
Cash payments in relation to lease liabilities (69) (70)
Lease interest paid (6) (3)
Dividend paid to Company's shareholders (1,762) (2,186)
Net cash used in financing activities (10,960) (1,964)
Net decrease in cash and cash equivalents (1,054) (2,318)
Effect of exchange rate changes (146) 315
Cash and cash equivalents at 1 January 11,739 13,742
Cash and cash equivalents at 31 December 10,539 11,739
Notes to the financial statements
for the year ended 31 December 2023
1. General information
Anpario plc ("the Company") and its Subsidiaries (together "the Group")
produce and distribute natural feed additives for animal health, hygiene and
nutrition. Anpario plc is a public company traded on the Alternative
Investment Market ("AIM") of the London Stock Exchange and is incorporated in
the United Kingdom and registered in England and Wales. The address of its
registered office is Unit 5 Manton Wood Enterprise Park, Worksop,
Nottinghamshire, S80 2RS. The presentation currency of the Group is pounds
sterling. For details of the basis of consolidation see note 2.2.
2. Summary of significant accounting policies
2.1. Basis of preparation
The Group has presented its financial statements in accordance with UK adopted
International Accounting Standards.
The financial statements have been prepared on the historical cost basis,
except for financial instruments that are measured at fair values at the end
of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration
given in exchange for goods and services.
The preparation of financial statements in conformity with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in a period
of the revision and future periods if the revision affects both current and
future periods. More information is available in note 2.22.
The principal accounting policies of the Group are set out below, and have
been applied consistently in dealing with items which are considered material
in relation to the Group's financial statements.
Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group has adequate resources
to continue in operation for the foreseeable future and has been specifically
assessed to the period ending March 2025.
The Group has a strong balance sheet, with no debt and a strong cash position
and has traded profitably and cash generatively through the financial year.
The Group's forecasts and projections, taking into account reasonable estimate
of a possible downturn in trading performance arising from the ongoing market
and geo-political uncertainty, show that the Group has sufficient financial
resources, both from the Group's robust balance sheet and its expected cash
flow generation, sufficient for the going concern period. Accordingly, the
Directors have adopted the going concern basis in preparing these consolidated
financial statements.
2.2. Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its Subsidiaries drawn up to 31 December 2023.
Subsidiaries are all entities over which the Group has the power to govern the
financial and operating policies generally accompanying a shareholding of more
than one half of the voting rights. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity.
Inter-company transactions, balances, income and expenses on transactions
between Group companies are eliminated. Profits and losses resulting from
intercompany transactions that are recognised in assets are also eliminated.
Accounting policies of Subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
2.3. Revenue recognition
The Group applies IFRS 15 'Revenue from Contracts with Customers'. Revenue
comprises the fair value of the consideration received or receivable for the
sale of goods in the ordinary course of the Group's activities. Revenue is
shown net of value added tax, returns and discounts and after eliminating
sales within the Group. Revenue is derived principally from the sales of
goods.
The amount of revenue recognised reflects the consideration to which the Group
is or expects to be entitled to in exchange for those goods. Revenue is
recognised when the performance obligations have been satisfied, which is once
control of the goods has transferred from Anpario to the buyer. In most
instances, control passes and sales revenue is recognised at the point in time
when the product is delivered to the vessel or vehicle on which it will be
transported once loaded, the destination port or the customer's premises.
In some instances, the goods are sold on Cost and Freight (CFR) or Cost,
Insurance and Freight (CIF) Incoterms. When goods are sold on a CFR or CIF
basis, the Group is responsible for providing these services (shipping and
insurance) to the customer, sometimes after the date at which Anpario has lost
control of the goods. Anpario considers revenue related to the shipping and
insurance service element of the contract to be immaterial and does not
consider there to be separate performance obligations.
2.4. Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board.
2.5. Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are
translated into pounds sterling at the rates of exchange ruling at the balance
sheet date. Transactions in foreign currencies are recorded at the rate ruling
at the date of the transaction. All differences are included in the profit or
loss for the period.
Functional and presentational currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("functional currency"). The consolidated financial statements
are presented in pounds sterling, which is the Group's functional and
presentational currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using exchange rates prevailing at the date of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at period end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges.
Group companies
The results and financial position of all Group entities that have a
functional currency different from the presentational currency are translated
into the presentational currency as follows:
- assets and liabilities for each balance sheet presented are
translated at the closing exchange rate at the date of the balance sheet;
- income and expenses for each income statement are translated at
average exchange rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in
which case the income and expenses are translated at the rate on the dates of
the transaction); and
- all resulting exchange differences are recognised as a separate
component of equity.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations, and of borrowings and other currency
instruments designated as hedges of such investments, are taken to
shareholders' equity. When a foreign operation is partially disposed of or
sold, exchange differences that were recognised in equity are recognised in
the income statement as part of the gain or loss on sale. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity are treated
as assets and liabilities of the foreign entity and translated at the closing
exchange rate.
2.6. Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the identifiable net assets acquired. Goodwill
is reviewed for impairment at least annually or more frequently if events or
changes in circumstances indicate a potential impairment. Goodwill is carried
at cost less accumulated impairment losses and is allocated to the appropriate
cash-generating unit for the purpose of impairment testing. Any impairment is
recognised immediately through the income statement and is not subsequently
reversed.
Brands
Brands are stated at cost less accumulated amortisation and impairment. Brand
names acquired in a business combination are recognised at fair value based on
an expected royalty value at the acquisition date. Useful lives of brand names
are estimated and amortised over a period of 20 to 30 years on a straight-line
basis and included in administrative expenses in the income statement. The
Optivite Brand has already existed for over 30 years and is expected to
continue to have a useful life into the foreseeable future, however management
felt it appropriate to assign a finite life rather than an indefinite one and
as such assigned a life of 30 year's to this asset. This change was made in
the current year and amortisation has commenced on this basis. Brands are
allocated to appropriate cash-generating units and subject to impairment
testing on an annual basis. Any impairment is recognised immediately through
the income statement and is not subsequently reversed.
Patents, trademarks and registrations
Separately acquired patents, trademarks and registrations are shown at
historical cost. Patents, trademarks and registrations have finite useful
lives and are carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate the cost of patents,
trademarks and registrations over their estimated useful lives of 5 to 20
years and included in administrative expenses in the income statement.
Development costs
Development costs are stated at cost less accumulated amortisation and
impairment. Development costs are recognised if it is probable that there will
be future economic benefits attributable to the asset, the cost of the asset
can be measured reliably, the asset is separately identifiable and there is
control over the use of the asset.
The assets are amortised when available for use on a straight-line basis over
the period over which the Group expects to benefit from these assets and
included in administrative expenses in the income statement. Research
expenditure is written off to the income statement in the year in which it is
incurred.
Where appropriate, once development work has been completed the asset(s)
generated is reclassified to the Developed Products intangible asset category
and is amortised over a period of 10 years.
Development costs that are directly attributable to the design and testing of
identifiable and unique products controlled by the Group are recognised as
intangible assets when the following criteria are met:
- it is technically feasible to complete the product so that it will
be available for use;
- management intends to complete the product and use or sell it;
- there is an ability to use or sell the product;
- it can be demonstrated how the product will generate probable
future economic benefits;
- adequate technical, financial and other resources to complete the
development and to use or sell the product are available; and
- the expenditure attributable to the product during its development
can be reliably measured.
Directly attributable costs that are capitalised as part of the product
include the development employee costs and an appropriate portion of relevant
overheads.
Software and licenses
Software and licenses are stated at cost less accumulated amortisation and
impairment. Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to its working condition for its
intended use. Amortisation is calculated using the straight-line method to
allocate the cost of software and licenses over their estimated useful lives
of 5 to 7 years and included in administrative expenses in the income
statement.
2.7. Impairment of non-financial assets
The carrying amounts of the Group's assets are reviewed at each balance sheet
date to determine whether there is any indication of impairment, if so the
asset's recoverable amount is estimated. The recoverable amount is the higher
of its fair value less costs to sell and its value in use. For intangible
assets that are not yet available for use, goodwill or other intangible assets
with an indefinite useful life, an impairment test is performed at each
balance sheet date.
In assessing value in use, the expected future cash flows from the asset are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset. An impairment loss is recognised in the income statement
whenever the carrying amount of an asset or its cash-generating unit exceeds
its recoverable amount.
A previously recognised impairment loss is reversed if the recoverable amount
increases as a result of a change in the estimates used to determine the
recoverable amount, but not to an amount higher than the carrying amount that
would have been determined (net of depreciation and or amortisation) had no
impairment loss been recognised in prior years. For goodwill, a recognised
impairment loss is not reversed.
If an impaired asset is highly unlikely to see future increases in it's
recoverable amount then the cost and accumulated amortisation will be written
off as a disposal.
2.8. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment. Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to its working condition for its
intended use. Land is not depreciated. Depreciation is provided at rates
calculated to write off the cost less estimated residual value of each asset
over its expected useful life using the straight-line method, as follows:
Buildings 50 years or period of lease if shorter
Plant and machinery 3-10 years
Fixtures, fittings and equipment 3-10 years
The carrying amounts of the Group's assets are reviewed at each balance sheet
date to determine whether there is any indication of impairment and an
impairment loss is recognised in the income statement where appropriate.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within the income statement.
2.9. Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is
determined using the weighted average cost method. The cost of finished goods
comprises raw materials, direct labour, other direct costs and related
production overheads that have been incurred in bringing the inventories to
their present location and condition. Net realisable value is the estimated
selling price in the ordinary course of business.
2.10. Trade receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost, less provision for impairment. A provision for
impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according
to the original terms of the receivables. The provision is recognised in the
income statement as an administrative expense.
The Group applies the simplified approach when using the expected credit loss
(ECL) impairment model for trade receivables. Under the simplified approach
the Group always measures the loss allowance at an amount equal to the
lifetime ECL for trade receivables.
The measurement of ECL is a function of the probability of default, loss given
default (i.e. the magnitude of the loss if there is a default) and the
exposure at default. Loss given default is an estimate of the loss arising on
default. It is based on the difference between the contractual cash flows due
and those that the lender would expect to receive. Probability of default
constitutes a key input in measuring ECL. Probability of default is an
estimate of the likelihood of default over a given time horizon, the
calculation of which includes historical data, assumptions and expectations of
future conditions.
The ECL on these financial assets are estimated using a provision matrix based
on the Group's historical credit loss experience, adjusted for factors that
are specific to the debtors, general economic conditions and an assessment of
both the current as well as the forecast direction of conditions at the
reporting date, including time value of money where appropriate.
The ECL's are updated each reporting period to reflect changes in credit risk
since initial recognition. The Group writes off a trade receivable when there
is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery, e.g. when the debtor has been
placed under liquidation or has entered into bankruptcy proceedings. None of
the trade receivables that have been written off is subject to enforcement
activities.
2.11. Trade and other payables
Trade and other payables are initially recognised at fair value and are
subsequently measured at amortised cost. Trade and other payables are
obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Trade payables are classified as
current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented
as non-current liabilities.
2.12. Cash, cash equivalents and short-term investments
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short-term deposits that
are readily convertible into cash with a notice period of less than three
months.
Short-term investments
Short-term investments comprise short-term deposits that are readily
convertible into cash with a notice period more than three months and less
than a year.
2.13. Financial instruments
The Group's principal financial instruments comprise derivatives and cash and
cash equivalents. These financial instruments are used to manage currency
exposures, funding and liquidity requirements. Other financial instruments
which arise directly from the Group's operations includes trade and other
receivables (note 18) and trade and other payables (note 22). The main risks
arising from the Group's financial instruments and related policies are
detailed in note 2.21.
Financial instruments, excluding derivatives, are held at amortised cost.
Derivative financial instruments are detailed in note 2.14.
The Group uses the following valuation hierarchy to determine the carrying
value of financial instrument that are measured at fair value:
Level 1 Quoted (unadjusted) prices in active markets for identical assets or
liabilities.
Level 2 Inputs other than quoted prices included within level 1 that are observable
for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices).
Level 3 Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs).
2.14. Derivative financial instruments
Where qualifying for hedge accounting, derivative financial instruments are
held at fair value through other comprehensive income, non-qualifying
derivatives are held at fair value through profit or loss.
The Group designates certain hedging instruments, which include derivatives,
in respect of foreign currency risk, as cash flow hedges. Hedges of foreign
exchange risk on firm commitments are accounted for as cash flow hedges.
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in other
comprehensive income and accumulated in reserves in equity. The gain or loss
relating to the ineffective portion is recognised immediately in profit or
loss. Amounts accumulated in equity are reclassified to profit or loss in the
periods when the hedged item affects profit or loss (for instance when the
forecast sale that is hedged takes place).
2.15. Exceptional items
Exceptional items are disclosed separately in the financial statements where
it is necessary to do so to provide further understanding of the financial
performance of the Group. They are no material items of income or expense that
have been shown separately due to the significance of their nature or amount.
2.16. Taxation
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this
case the tax is also recognised in other comprehensive income or directly in
equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date in the countries
where the Company's Subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. Deferred income tax
is determined using tax rates and laws that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is
settled.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the temporary
differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or
different taxable entities where there is an intention to settle the balances
on a net basis.
2.17. Employee benefits
Share-based payments
The Group issues equity-settled share-based payments and shares under the
Joint Share Ownership Plan ("JSOP"), Company Share Option Plan ("CSOP") and
Unapproved schemes to certain employees. These are measured at fair value and
along with associated expenses are recognised as an expense in the income
statement with a corresponding increase (net of expenses) in equity. The fair
values of these payments are measured at the dates of grant using appropriate
option pricing models, taking into account the terms and conditions upon which
the awards are granted. The fair value is recognised over the period during
which employees become unconditionally entitled to the awards subject to the
Group's estimate of the number of awards which will lapse, either due to
employees leaving the Group prior to vesting or due to non-market based
performance conditions not being met.
The Group operates a number of equity-settled, share-based compensation plans,
under which the entity receives services from employees as consideration for
equity instruments (options) of the Group. The fair value of the employee
services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed is determined by reference to the
fair value of the options granted:
- including any market performance conditions (for example, an
entity's share price);
- excluding the impact of any service and non-market performance
vesting conditions (for example, profitability, sales growth targets and
remaining an employee of the entity over a specified time period); and
- including the impact of any non-vesting conditions (for example,
the requirement for employees to save).
Non-market performance and service conditions are included in assumptions
about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied.
In addition, in some circumstances employees may provide services in advance
of the grant date and therefore the grant date fair value is estimated for the
purposes of recognising the expense during the period between service
commencement period and grant date.
At the end of each reporting period, the Group revises its estimates of the
number of options that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original estimates, if
any, in the income statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium. The grant by the Company of
options over its equity instruments to the employees of Subsidiary
undertakings in the Group is treated as a capital contribution. The fair value
of employee services received, measured by reference to the grant date fair
value, is recognised over the vesting period as an increase to investment in
Subsidiary undertakings, with a corresponding credit to equity in the Parent
entity financial statements.
The social security contributions payable in connection with the grant of the
share options is considered an integral part of the grant itself, and the
charge will be treated as a cash-settled transaction.
Pension obligations
The Group operates a defined contribution pension scheme and contributes a
percentage of salary to individual employee schemes. Pension contributions are
recognised as an expense as they fall due and the Group has no further payment
obligations once the contributions have been paid.
2.18. Equity and reserves
Share capital
Share capital is determined using the nominal value of Ordinary shares that
have been issued.
Share premium
The share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the issue
of shares are deducted from the share premium account, net of any related
income tax benefits.
Capital redemption reserve
The capital redemption reserve has arisen following the purchase by the
Company of its own shares and comprises the amount by which the distributable
profits were reduced on these transactions in accordance with the Companies
Act 2006.
Treasury shares
Treasury shares represents consideration paid, including any directly
attributable incremental costs, to acquire shares held by the Company in
Anpario plc.
Joint Share Ownership Plan
The JSOP shares reserve arises when the Company issues equity share capital
under the JSOP, which is held in trust by Anpario plc Employees' Share Trust
("the Trust"). The interests of the Trust are consolidated into the Group's
financial statements and the investment in the Company's shares is deducted
from equity as if they were treasury shares.
Merger reserve
The premium arising on the issue of consideration shares to acquire a business
is credited to the merger reserve.
Cash flow hedge reserve
The cash flow hedge reserve represents the cumulative amount of gains and
losses on hedging instruments deemed effective as cash flow hedges. The
cumulative deferred gain or loss on the hedging instrument is recognised only
when the hedged transaction impacts the profit or loss.
Share-based payment reserve
The share-based payment reserve is credited with amounts charged to the income
statement in respect of the movements in the fair value of equity-settled
share-based payments and shares issued under the JSOP.
Translation reserve
Exchange differences relating to the translation of the net assets of the
Group's foreign operations, from their functional currency into the Parent
Company's functional currency, being pounds sterling, are recognised directly
in the foreign exchange reserve.
Retained earnings
All other net gains and losses and transactions with owners (e.g. dividends)
not recognised elsewhere.
2.19. Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a
liability in the Group's financial statements in the period in which the
dividends are approved by the Company's shareholders.
2.20. Leases
The Group assesses whether a contract is or contains a lease, at inception of
the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of
12 months or less). For these leases, the Group recognises the lease payments
as an operating expense on a straight-line basis over the term of the lease
unless another systematic basis is more representative of the time pattern in
which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
The lease liability is presented as a separate line in the consolidated
statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right-of-use asset) whenever:
- the lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of exercise of
a purchase option, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate; or
- the lease payments change due to changes in an index or rate or a
change in expected payment under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting the revised lease payments
using an unchanged discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is
used); or
- a lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability is
remeasured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of
the modification.
Right-of-use assets relating to the Group's leasing activities are recognised
in the consolidated statement of financial position at an amount equal to the
lease liability on initial measurement and any subsequent adjustments such as
modifications to lease terms. Right-of-use assets are depreciated over the
shorter period of lease term and useful life of the underlying asset.
2.21. Financial risk management
The Group is exposed to a number of financial risks, including credit risk,
liquidity risk, exchange rate risk and capital risk.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's receivables from
customers and deposits with financial institutions. The Group's exposure to
credit risk is influenced mainly by the individual characteristics of each
customer. The Group has an established credit policy under which each new
customer is analysed for creditworthiness before the Group's payment and
delivery terms and conditions are offered. Where possible, risk is minimised
through settlement via letters of credit and purchase of credit insurance. The
Group's investment policy restricts the investment of surplus cash to interest
bearing deposits with banks and building societies without high credit
ratings.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group's approach to managing
liquidity is to ensure that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or damage to the Group's reputation.
Exchange rate risk
The Group's principal functional currency is pounds sterling. However, during
the year the Group had exposure to Euros, US dollars and other currencies. The
Group's policy is to maintain natural hedges, where possible, by matching
revenue and receipts with expenditure and put in place hedging instruments as
considered appropriate to mitigate the risk.
Capital risk
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. The Group's overall strategy
remains unchanged from 2022.
The capital structure of the Group consists of equity of the Group, comprising
issued capital, reserves and retained earnings as disclosed in notes 23 to 25.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends payable to shareholders, return capital to shareholders or
issue new shares.
2.22. Critical accounting judgements and key sources of estimation
uncertainty
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are:
Critical accounting judgements
Capitalisation of development costs
Development costs are capitalised as per the Group accounting policy outlined
in note 2.6, which identifies several criteria to be met in order for
capitalisation to occur in accordance with IAS 38. Inherently due to the
nature of developing new products and applications there is uncertainty as to
the outcome and judgements are required to make a determination as to the
suitability of costs for capitalisation.
Hedge accounting
Judgement is required to assess if hedging instruments qualify for hedge
accounting in accordance with IFRS 9. The Group's accounting policy related to
this is outlined in note 2.14.
Deferred tax recognition
Deferred tax is provided in full on temporary differences under the liability
method using substantively enacted rates to the extent that they are expected
to reverse. Provision is made in full where the temporary differences result
in liabilities, but deferred tax assets are only recognised where the
Directors believe it is probable that the assets will be recovered. Judgement
is required to determine the likelihood of reversal of temporary differences
in establishing whether an asset should be recognised.
Key sources of estimation uncertainty
Estimated impairment value of intangible assets
The Group tests annually whether intangible assets have suffered any
impairment. Impairment provisions are recorded as applicable based on
Directors' estimates of recoverable values. Following the assessment of the
recoverable amount of goodwill and intangibles of the Group that totalled
£10.6m as per note 13 of the financial statements, the Directors consider the
recoverable amount of goodwill and intangibles to be supported by their value
in use calculation. Budgets comprise forecasts of revenue, staff costs and
overheads based on current and anticipated market conditions that have been
considered and approved by the Board. Whilst the Group is able to manage
aspects of costs, the revenue projections are inherently uncertain due to the
short-term nature of business and unstable market conditions driven by
external factors. The sensitivity analysis in respect of the recoverable
amount of goodwill is presented in note 13.
2.23. Adoption of new and revised accounting standards
New standards, interpretations and amendments effective from 1 January 2022
During the year, the Group has adopted the following new and revised standards
and interpretations. Their adoption has not had any significant impact on the
accounts or disclosures in these financial statements except changes to the
disclosure of accounting policies which has led to more focused policies on
material accounting areas:
- IFRS 17 Insurance Contracts;
- Disclosure of Accounting Policies (Amendment to IAS 1 and IFRS
Practice Statement 2);
- Definition of Accounting Estimates (Amendment to IAS 8);
- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12); and
- International Tax Reform - Pillar Two Model Rules (Amendment to
IAS 12 Income taxes).
New standards, interpretations and amendments not yet effective
The Group has not early adopted the following new standards, amendments or
interpretations that have been issued but are not yet effective:
- Liability in a Sales and Leaseback (Amendments to IFRS 16
Leases);
- Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1 Presentation of Financial Statements);
- Non-current Liabilities with Covenants (Amendments to IAS 1
Presentation of Financial Statements);
- Supplier Finance Arrangements (Amendments to IAS 7 Statement of
Cash Flows and IFRS 7 Financial Instruments: Disclosures); and
- Lack of Exchangeability (Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates).
3. Operating segments
Management has determined the operating segments based on the information that
is reported internally to the Chief Operating Decision Maker, the Board of
Directors, to make strategic decisions. The Board considers the business from
a geographic perspective and is organised into four geographical operating
divisions: Americas, Asia, Europe, Middle-East and Africa (MEA) and Head
Office.
All revenues from external customers are derived from the sale of goods and
services in the ordinary course of business to the agricultural markets and
are measured in a manner consistent with that in the income statement.
for the year ended 31 Dec 2023 Americas Asia Europe MEA Head Office Total
£000 £000 £000 £000 £000 £000
Total segmental revenue 9,057 11,367 13,832 3,872 - 38,128
Inter-segment revenue - - (7,130) - - (7,130)
Revenue from external customers 9,057 11,367 6,702 3,872 - 30,998
Depreciation and amortisation (3) (75) (13) (4) (1,142) (1,237)
Net finance income - (2) - 1 231 230
Profit/(loss) before income tax 1,763 2,788 2,263 1,359 (5,420) 2,753
for the year ended 31 Dec 2022 Americas Asia Europe MEA Head Office Total
£000 £000 £000 £000 £000 £000
Total segmental revenue 9,149 12,617 16,071 3,848 - 41,685
Inter-segment revenue - - (8,582) - - (8,582)
Revenue from external customers 9,149 12,617 7,489 3,848 - 33,103
Depreciation and amortisation (3) (55) (13) (4) (1,150) (1,225)
Net finance income - 1 - - 120 121
Profit/(loss) before income tax 3,301 3,530 2,641 972 (6,763) 3,681
No customer accounts for more than 10% of revenue.
Management review and control the Net and Total assets of the Group and
individual Companies, however, these are not monitored by Operating Segment
and as such they are not presented as such above.
4. Operating profit
Operating profit for the year has been arrived at after charging the following
items:
2023 2022
Notes £000 £000
Cost of inventories recognised as an expense 11,937 12,449
Employment costs 7 6,743 6,539
Share-based payment charges 6 304 213
Amortisation of intangible assets 13 663 646
Depreciation of property, plant and equipment 14 504 509
Depreciation of right-of-use assets 15 70 70
Loss on disposal of tangible and intangible assets 552 46
Research and development expenditure 63 98
Our specialist technical team includes experts in poultry, swine, ruminant
& aquaculture species. During the year we have capitalised internal costs
of £153,000 (2022: £447,000) and expended a further £156,000 (2022:
£81,000) on external trials in respect of current development projects.
The charge for the year in respect of share options granted and associated
expenses amounts to £304,000 (2022: £213,000) of which a charge of £20,000
(2022: £30,000) relates to professional
fees.
5. Auditor's remuneration
During the year the Group obtained the following services from the Company's
auditor:
2023 2022
£000 £000
Fees payable to Company's auditor for the audit of Parent Company and 115 111
consolidated financial statements
Fees payable to Company's auditor for other services:
Other non-audit services 6 5
The audit of Company Subsidiaries 6 5
Total fees payable to Company's auditor 127 121
6. Alternative performance measures
In reporting financial information, the Group presents alternative performance
measures (APMs), which are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide depth and understanding
to the users of the financial statements to allow for further assessment of
the underlying performance of the Group.
The Board considers that adjusted EBITDA is the most appropriate profit
measure by which users of the financial statements can assess the ongoing
performance of the Group. EBITDA is a commonly used measure in which earnings
are stated before net finance income, amortisation and depreciation. The Group
makes further adjustments to remove items that are non-recurring or are not
reflective of the underlying operational performance either due to their
nature or level of volatility. EBITDA is often used as a proxy for cash flows
and accordingly the Group adjusts for share-based payment charges which are a
non-cash measure.
As part of regular review processes, an impairment of research and development
expenditure was identified in the year. This relates to a number of projects
which, whilst demonstrating positive results, would have required further
investment and a decision was made to halt work on these initiatives. Due to
the exceptional and non-recurring nature of these costs, they have been
excluded from our APMs.
2023 2022
£000 £000
Operating profit 2,523 3,560
R&D Impairment 399 -
Non-recurring acquisition costs - 210
Share-based payments 304 213
Total adjustments 703 423
Adjusted operating profit 3,226 3,983
Depreciation and amortisation 1,237 1,225
Adjusted EBITDA 4,463 5,208
2023 2022
£000 £000
Adjusted operating profit 3,226 3,983
Income tax expense (225) (378)
Income tax impact of adjustments 5 42
Impact of prior year Patent Box tax reduction (130) -
Adjusted profit after tax 2,876 3,647
7. Employment costs
2023 2022
Notes £000 £000
Wages and salaries 5,806 5,522
Social security costs 643 692
Other pension costs 294 325
Share-based payment charges 26 304 213
Employment costs 7,047 6,752
Employment costs stated above includes Director's remuneration. The key
management of the Group is deemed to be the Board of Directors who have
authority and responsibility for planning and controlling all significant
activities of the Group.
Wages and salaries is shown net of an adjustment for capitalised internal
costs of £153,000 (2022: £447,000) in respect of current development
projects, see note 13.
Director's remuneration details can be found in the Remuneration Committee
Report.
2023 2022
£000 £000
Director's emoluments 548 581
Company contributions to defined contribution pension schemes 41 47
Share-based payment charges 128 80
During the year retirement benefits were accruing to 3 Directors (2022: 3).
Richard Edwards and Karen Prior opted to take their entitlement as cash in
lieu of contributions to a defined contribution pension schemes.
The highest paid Director received remuneration as outlined below.
2023 2022
£000 £000
Director's emoluments 260 410
Company contributions to defined contribution pension schemes 25 25
Share-based payment charges 2 2
8. Number of employees
The average monthly number of employees, including Directors, during the year
was:
2023 2022
£000 £000
Directors 5 5
Production 26 33
Administration 22 23
Sales and Technical 62 63
Average headcount 115 124
In addition to employees, sales and technical specialists are engaged on a
consultancy basis in several countries.
9. Net finance income
2023 2022
£000 £000
Interest receivable on short-term bank deposits 236 124
Finance income 236 124
Lease interest paid (6) (3)
Finance costs (6) (3)
Net finance income 230 121
10. Income tax
2023 2022
Note £000 £000
Current tax on profits for the year 198 263
Adjustment for prior years (6) (89)
Current tax 192 174
Origination and reversal of temporary differences 188 226
Adjustment for prior years (155) (22)
Deferred tax 16 33 204
Income tax expense charged to the income statement 225 378
The tax on the Company's profit before tax differs from the theoretical amount
that would arise using the standard domestic tax rate applicable to profits of
the Company as follows:
2023 2022
£000 £000
Profit before tax 2,753 3,681
Tax at the UK domestic rate 23.5% (2022: 19.0%) 648 699
Prior year tax adjustments (161) (111)
Patent Box reductions - Prior year (130) -
Patent Box reductions - Current year (203) (163)
Non-deductible expenses 138 4
Losses not recognised for deferred tax 70 22
Research and development tax credits (81) (152)
Tax charge recognised directly in equity 21 9
Difference in overseas tax rates (77) 70
Tax adjustments (423) (321)
Income tax expense charged to the income statement 225 378
Corporation tax is calculated at 23.5% (2022: 19.0%) of the estimated
assessable profit for the year. The UK government announced on 3 March 2021
that the government are intending to increase the corporation tax rate from
19% to 25% from April 2023.
In addition to the amount charged to the income statement, the following
amounts relating to tax have been recognised in other comprehensive income.
2023 2022
Note £000 £000
Current tax on profits for the year - -
Current tax - -
Origination and reversal of temporary differences 309 (202)
Deferred tax 16 309 (202)
Income tax recognised in other comprehensive income 309 (202)
11. Dividends
Amounts recognised as distributions to equity holders for the year ended 31
December:
2023 2023 2022 2022
per share total per share total
pence £000 pence £000
Interim dividend - Paid 3.20p 534 3.15p 674
Final dividend - Paid - - 7.35p 1,228
Final dividend - Proposed 7.50p 1,253 - -
Final dividend 7.50p 1,253 7.35p 1,228
Total dividend 10.70p 1,787 10.50p 1,902
The proposed final dividend is subject to approval by the shareholders at the
AGM and has not been included as a liability in these financial statements.
The total amount of dividend paid to shareholders in the year was £1,762,000
(2022: £2,186,000), being the final dividend for the year prior and the
interim dividend for current year.
Under the Joint Share Ownership Plan ("JSOP") the proceeds of dividends
received on jointly owned shares will be divided between the employees and the
Trust according to any growth in the market value. Dividend amounts due to the
Trust are waived. The calculation of the split is made at the time of payment
and the estimated dividend amount shown above includes an estimate of the
amounts to be waived.
12. Earnings per share
The Group presents basic and diluted earnings per share ("EPS") data, both
adjusted and non-adjusted for its ordinary shares. Basic EPS is calculated by
dividing profit attributable to ordinary shareholders by the weighted average
number of ordinary shares fully outstanding during the period. Potential
ordinary shares and shares held in the Joint Share Ownership Plan ("JSOP") are
only treated as dilutive when their conversion to ordinary shares would
decrease EPS.
The calculation of earnings per share is based on the following data:
Note 2023 2022
Basic weighted average number of shares 18,716,282 20,481,713
Number of dilutive potential shares 73,034 1,392,327
Diluted weighted average number of shares 18,789,316 21,874,040
Profit for the year attributable to owners of the Parent (£000's) 2,528 3,303
Basic earnings per share 13.51p 16.13p
Diluted earnings per share 13.45p 15.10p
Adjusted profit attributable to owners of the Parent (£000's) 6 2,876 3,647
Adjusted earnings per share 15.37p 17.81p
Diluted adjusted earnings per share 15.31p 16.67p
13. Intangible assets
Goodwill Brands and Customer relationships Patents, trademarks Development costs Software Total
developed
and registrations
and Licenses
products
£000 £000 £000 £000 £000 £000 £000
Cost
As at 1 January 2022 5,960 4,553 786 1,807 806 797 14,709
Additions - 78 - 115 528 10 731
Reclassifications - 135 - - (135) 136 136
Disposals - - - - (45) - (45)
Foreign exchange - - - 2 - - 2
As at 31 December 2022 5,960 4,766 786 1,924 1,154 943 15,533
Additions - 50 - 153 259 4 466
Reclassifications - 529 - - (529) - -
Disposals - - - (1,051) (399) (22) (1,472)
As at 31 December 2023 5,960 5,345 786 1,026 485 925 14,527
Accumulated amortisation
As at 1 January 2022 - 992 722 1,068 - 632 3,414
Charge for the year - 326 23 195 - 102 646
Reclassifications - - - - - 98 98
As at 31 December 2022 - 1,318 745 1,263 - 832 4,158
Charge for the year - 362 10 227 - 64 663
Impairment provision - - - - 399 - 399
Disposals - - - (909) (399) (22) (1,330)
As at 31 December 2023 - 1,680 755 581 - 874 3,890
Net book value
As at 1 January 2022 5,960 3,561 64 739 806 165 11,295
As at 31 December 2022 5,960 3,448 41 661 1,154 111 11,375
As at 31 December 2023 5,960 3,665 31 445 485 51 10,637
Brands relate to the fair value of previously acquired brands. The Optivite
brand was acquired in 2009 and has a net book value at 31 December 2023 of
£1,401,000 (2022: £1,451,000). The Meriden brand was acquired in 2012 and
has a net book value at 31 December 2023 of £292,000 (2022: £328,000). These
are deemed to have a useful economic life between 20 and 30 years due to the
inherent intellectual property contained in the products, the longevity of the
product lives and global market opportunities.
Goodwill related to previously acquired operations is reviewed on a global
basis with a further consideration of the sales attributable to each of the
trading brands as identified in the table below.
Goodwill is allocated as follows:
£000
Acquisition of Kiotechagil operations 3,552
Acquisition of Optivite operations 592
Acquisition of Meriden operations 1,346
Acquisition of Cobbett business 470
Goodwill as at 1 December 2022, 31 December 2022 and 31 December 2023 5,960
The recoverable amount of a CGU is determined based on value-in-use
calculations. These calculations use pre-tax cash flow projections based on
financial budgets approved by management covering a five-year period. Cash
flows beyond a five-year period are extrapolated using estimated growth rates
of 2.5% per annum (2022: 2.5%).
The discount rate used of 14% (2022: 14%) is pre-tax and reflects specific
risks relating to the operating segments.
Based on the calculations of the recoverable amount of each CGU, no impairment
to goodwill was identified.
The Group has conducted a sensitivity analysis on the impairment test of each
CGU and the group of units carrying value. A cut in the annual growth rate of
4.6 (2022: 6.2) percentage points to a negative growth of minus 2.1 (2022:
3.7) percentage points would cause the carrying value of goodwill to equal its
recoverable amount.
14. Property, plant and equipment
Land and Plant and machinery Fixtures, fittings Assets in the course Total
buildings
and equipment
of construction
£000 £000 £000 £000 £000
Cost
As at 1 January 2022 1,921 3,801 526 844 7,092
Additions 29 38 35 707 809
Transfer of assets in construction 303 1,203 (139) (1,503) (136)
Disposals (2) (25) (29) - (56)
Foreign exchange - - 2 - 2
As at 31 December 2022 2,251 5,017 395 48 7,711
Additions 2 11 12 252 277
Transfer of assets in construction - 282 9 (291) -
Disposals - (67) (37) (9) (113)
Foreign exchange - - (4) - (4)
As at 31 December 2023 2,253 5,243 375 - 7,871
Accumulated depreciation
As at 1 January 2022 313 1,811 365 - 2,489
Charge for the year 47 391 71 - 509
Reclassification (8) 9 (98) - (97)
Disposals (2) (24) (29) - (55)
Foreign exchange - - 1 - 1
As at 31 December 2022 350 2,187 310 - 2,847
Charge for the year 51 414 39 - 504
Disposals - (65) (37) - (102)
Foreign exchange - - (4) - (4)
As at 31 December 2023 401 2,536 308 - 3,245
Net book value
As at 1 January 2022 1,608 1,990 161 844 4,603
As at 31 December 2022 1,901 2,830 85 48 4,864
As at 31 December 2023 1,852 2,707 67 - 4,626
Held within land and buildings is an amount of £500,000 (2022: £500,000) in
respect of non-depreciable land.
15. Right-of-use assets
Land and Plant and Fixtures, fittings Total
buildings
machinery
and equipment
£000 £000 £000 £000
Cost
As at 1 January 2022 270 - 3 273
Additions - 23 - 23
Modification to lease terms 12 - - 12
Foreign exchange 14 - - 14
As at 31 December 2022 296 23 3 322
Additions - 11 - 11
Modification to lease terms 87 - - 87
Foreign exchange (19) - - (19)
As at 31 December 2023 364 34 3 401
Accumulated depreciation
As at 1 January 2022 191 - 1 192
Charge for the year 68 1 1 70
Foreign exchange 10 - - 10
As at 31 December 2022 269 1 2 272
Charge for the year 62 7 1 70
Foreign exchange (17) - - (17)
As at 31 December 2023 314 8 3 325
Net book value
As at 1 January 2022 79 - 2 81
As at 31 December 2022 27 22 1 50
As at 31 December 2023 50 26 - 76
Land and building right-of-use assets relate to leased offices, other assets
are less material and various in nature that are required for the Group to
conduct its activities.
Further information about the lease liabilities that relate to the
right-of-use assets above are contained in note 21. Details of cash outflow
for those leases are contained in the Consolidated Statement of Cash Flows.
There are no material short-term or low value leases.
16. Deferred tax
2023 2022
Notes £000 £000
As at 1 January 865 912
Income statement charge 10 33 204
Deferred tax charged/(credited) directly to equity 10 309 (202)
Foreign exchange 18 (49)
As at 31 December 1,225 865
Accelerated Fair value Cashflow Losses Other timing Total
tax allowances
gains
hedge
differences
Notes £000 £000 £000 £000 £000 £000
As at 1 January 2022 1,444 805 15 (433) (919) 912
Income statement charge/(credit) 10 135 (25) - (54) 148 204
Deferred tax charged/(credited) directly to equity - - (273) (94) 165 (202)
Foreign exchange - - - (49) - (49)
As at 31 December 2022 1,579 780 (258) (630) (606) 865
Income statement (credit)/charge 10 (290) 108 - 51 164 33
Deferred tax charged directly to equity - - 219 - 90 309
Foreign exchange - - - 18 - 18
As at 31 December 2023 1,289 888 (39) (561) (352) 1,225
2023 2022
£000 £000
Deferred income tax asset (537) (859)
Deferred income tax liability 1,762 1,724
Net deferred income tax liability 1,225 865
Included in 'Other timing differences' above is £351,000 (2022: £529,000)
that relates to the tax impact of the elimination of intercompany unrealised
profit held in inventory.
The UK government announced on 3 March 2021 that the government are intending
to increase the corporation tax rate from 19% to 25% from April 2023.
A deferred tax asset has been recognised in the UK and US for tax losses,
carried forward on the grounds that sufficient future taxable profits are
forecast to be realised. No deferred tax asset is recognised in respect of
losses incurred in other overseas subsidiaries, due to the uncertainty
surrounding the timing of the utilisation of those losses.
17. Inventories
2023 2022
£000 £000
Raw materials and consumables 3,064 4,664
Finished goods and goods for resale 3,284 5,203
Inventory 6,348 9,867
18. Trade and other receivables
2023 2022
£000 £000
Trade receivables - gross 5,973 6,198
Less: expected credit losses (357) (231)
Trade receivables - net 5,616 5,967
Taxes 475 450
Other receivables 74 56
Prepayments 650 530
Total trade and other receivables 6,815 7,003
The gross trade receivables are denominated in the following currencies:
2023 2022
£000 £000
Pounds sterling 1,843 1,724
US dollars 2,341 2,460
Euros 666 924
Other currencies 1,123 1,090
Trade receivables - gross 5,973 6,198
No interest is charged on trade receivables if balances are paid in full and
to terms, there has been no interest charged in the current or previous
financial year. There is no security held against outstanding balances.
The Group applies the simplified approach to provisioning for expected credit
losses prescribed by IFRS 9, which permits the use of the lifetime expected
loss provisioning for all trade receivables.
The Group measures the loss allowance for trade receivables at an amount equal
to lifetime expected credit loss "ECL". The ECL on trade receivables are
estimated using a provision matrix by reference to past default experience of
the debtor and an analysis of the debtor's current financial position,
adjusted for factors that are specific to the debtors, general economic
conditions of the industry in which the debtors operate and an assessment of
both the current as well as the forecast direction of conditions at the
reporting date. The Group will also, using this and all other information
available, make specific judgements about receivables which may need to be
individually assessed for impairment. Where required these are marked as
Credit Impaired amounts and detailed analysis undertaken to assess the amount
likely to be recovered including consideration of the effect of credit
enhancements.
The Group seeks to mitigate credit risk, in so far as possible, through the
use of credit insurance. The Group has historically suffered low levels of
credit losses, whilst there are no guarantees on future performance, the
credit losses experienced in the past have come from customers that we were
unable to obtain specific credit insurance for. The credit insurance in place
allows for the recovery of 90% of trading debt with a customer according to a
pre-agreed insured limit. The Group sometimes trades beyond this credit
insured limit according to internal approval procedures.
Accordingly, the Group have segmented customers according to their credit
insurance status. The following table details the risk profile of trade
receivables based on the Group's provision matrix and individual assessments
as at 31 December 2023. The expected loss rates are the same for the Group and
Company.
Not 1-60 days 61-120 days >121 days Total
past due
past due
past due
past due
£000 £000 £000 £000 £000
Specifically insured customers 3,633 396 8 1 4,038
Uninsured customers 1,043 316 126 - 1,485
Credit impaired 33 32 62 323 450
Trade receivables - gross 4,709 744 196 324 5,973
Expected loss rates:
Specifically insured customers 0% 1% 6% 7% 0%
Uninsured customers 2% 6% 28% 35% 5%
Credit impaired 50% 50% 50% 61% 58%
Specifically insured customers 15 5 - - 20
Uninsured customers 22 18 36 - 76
Credit impaired 16 16 31 198 261
Expected credit losses 53 39 67 198 357
Trade receivables - net 4,656 705 129 126 5,616
The comparative table below shows the Group's provision matrix and individual
assessments as at 31 December 2022.
Not 1-60 days 61-120 days >121 days Total
past due
past due
past due
past due
£000 £000 £000 £000 £000
Specifically insured customers 3,884 969 107 - 4,960
Uninsured customers 670 151 31 6 858
Credit impaired 136 101 80 63 380
Trade receivables - gross 4,690 1,221 218 69 6,198
Expected loss rates:
Specifically insured customers 0% 1% 6% 7% 1%
Uninsured customers 2% 6% 28% 35% 4%
Credit impaired 28% 34% 36% 100% 43%
Specifically insured customers 16 11 6 - 33
Uninsured customers 14 9 9 2 34
Credit impaired 38 34 29 63 164
Expected credit losses 68 54 44 65 231
Trade receivables - net 4,622 1,167 174 4 5,967
The movement in expected credit losses under IFRS 9 are as follows:
Collectively Individually Total
assessed
assessed
£000 £000 £000
As at 1 January 2022 65 172 237
Provisions for receivables created 2 117 119
Amounts written off as unrecoverable - (31) (31)
Amounts recovered during the year - (96) (96)
Foreign exchange gains - 2 2
As at 31 December 2022 67 164 231
Provisions for receivables created 29 148 177
Amounts written off as unrecoverable - - -
Amounts recovered during the year - (47) (47)
Foreign exchange gains - (4) (4)
As at 31 December 2023 96 261 357
19. Financial instruments and risk management
Carrying amount of financial instruments:
As at 31 December 2023 Measured at amortised cost Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Total
Note £000 £000 £000 £000
Derivative financial instruments - 18 235 253
Non-current - 18 235 253
Trade and other receivables 18 6,815 - - 6,815
Derivative financial instruments - - 67 67
Short-term investments 20 110 - - 110
Cash and cash equivalents 20 10,539 - - 10,539
Current 17,464 - 67 17,531
Financial assets 17,464 18 302 17,784
Lease liabilities 21 (46) - - (46)
Derivative financial instruments 19 - (32) (14) (46)
Non-current (46) (32) (14) (92)
Trade and other payables 22 (4,046) - - (4,046)
Lease liabilities 21 (33) - - (33)
Derivative financial instruments 19 - (191) (186) (377)
Current (4,079) (191) (186) (4,456)
Financial liabilities (4,125) (223) (200) (4,548)
As at 31 December 2022 Measured at amortised cost Derivatives designated as hedging instruments Derivatives not designated as hedging instruments Total
Note £000 £000 £000 £000
Derivative financial instruments - - 153 153
Non-current - - 153 153
Trade and other receivables 18 7,003 - - 7,003
Derivative financial instruments - 1 20 21
Short-term investments 20 1,828 - - 1,828
Cash and cash equivalents 20 11,739 - - 11,739
Current 20,570 1 20 20,591
Financial assets 20,570 1 173 20,744
Lease liabilities 21 (17) - - (17)
Derivative financial instruments 19 - (417) (408) (825)
Non-current (17) (417) (408) (842)
Trade and other payables 22 (3,983) - - (3,983)
Lease liabilities 21 (35) - - (35)
Derivative financial instruments 19 - (533) (105) (638)
Current (4,018) (533) (105) (4,656)
Financial liabilities (4,035) (950) (513) (5,498)
Hedge relationships
The Group has elected to adopt the hedge accounting requirements of IFRS 9
Financial Instruments. The Group enters into hedge relationships where the
critical terms of the hedging instrument and the hedged item match, therefore,
for the prospective assessment of effectiveness a qualitative assessment is
performed. Hedge effectiveness is determined at the origination of the hedging
relationship. Quantitative effectiveness tests are performed at each period
end to determine the continuing effectiveness of the relationship. In
instances where changes occur to the hedged item which result in the critical
terms no longer matching, the hypothetical derivative method is used to assess
effectiveness.
Fair values of financial instruments
Financial instruments are measured in accordance with the accounting policy
set out in note 2.13. Derivative financial instruments, consisting of foreign
exchange forward and options contracts, are considered Level 2. There were no
transfers between levels in the period and the valuation technique used to
measure the instruments are forward exchange rates at the reporting date. The
carrying value of the financial instruments is at amortised cost and is deemed
to be approximate to fair value.
Credit risk
Trade receivables and cash are financial instruments deemed subject to credit
risk. Note 18 details credit risk relating to trade receivables. Cash balances
are invested with banks and financial institutions that have a minimum credit
rating to mitigate the credit risk. The Directors do not consider any losses
from non-performance of these institutions. The carrying value of the trade
receivables, cash balances and short-term investments represents the maximum
exposure to credit risk at the end of the year.
Liquidity risk
The Group maintains cash balances and monitors working capital to ensure it
has sufficient available funds for operations and planned investment activity.
The amounts due in more than one year are immaterial.
The derivative financial assets are all net settled; therefore, the maximum
exposure to credit risk at the reporting date is the fair value of the
derivative assets which are included in the consolidated statement of
financial position.
Financial liabilities, excluding those related to financial instruments, with
a maturity of more than 3 months are immaterial and comprise of lease
liabilities, disclosed in note 21 and derivative financial liabilities details
in the exchange rate section below. For all other financial liabilities, the
maturity is less than three months and therefore the carrying value is the
same as the fair value.
Currently management consider liquidity risk to be minimal.
Exchange rate risk
The Group is exposed to foreign currency exchange rate risk mainly as a result
of trade receivables and intercompany balances that will be settled in US
dollars.
The Group seeks to minimise the effects of exchange rate risk using various
methods, including entering into foreign currency forward and option
contracts. Where applicable these are designated as cash flow hedges against
highly probable forecast foreign currency sales. If cash flow hedge accounting
is not applicable then the value is taken through profit or loss.
Included within other comprehensive income is the movement in the cash flow
hedge reserve as outlined below.
2023 2022
£000 £000
Change in value of cash flow hedges 941 (1,175)
Deferred tax (liability)/asset (219) 273
Cash flow hedge movements (net of deferred tax) 722 (902)
The financial instruments in place are to mitigate the risks associated with
net future US dollar receipts. The Group uses two types of hedging instrument:
fixed forwards and participating forwards. The fixed forward contracts are
fixed agreements to exchange currency at the hedged rate. The participating
forwards provide protection at the hedged rate, each contract is divided into
monthly windows, at the end of each month the Group has the right but not the
obligation to sell at the hedged rate, however if spot trades below the
barrier rate in the month then the Group must sell USD at the hedged rate.
This means that Anpario has protection at the hedged rate, but may also
benefit from exchange between the barrier rate and hedged rate. The details of
the notional amounts, hedged rate and spot rate at 31 December are outlined
below. The maximum exposure to credit risk at the reporting date is the fair
value of the derivative assets in the Consolidated Statement of Financial
Position.
2023 2022
GBP/USD spot rate at 31 December 1.2732 1.2102
Fixed forward contracts
Weighted average forward rate 1.2770 1.3049
Maturing in the next year (Notional amount in US dollars 000's) 3,850 2,370
Maturing between one and two years (Notional amount in US dollars 000's) 3,550 4,200
Maturing between two and three years (Notional amount in US dollars 000's) 900 3,000
Notional amount (US Dollars 000's) 8,300 9,570
Participating forward contracts
Weighted average forward rate 1.3026 1.3130
Weighted average barrier rate 1.2049 1.2142
Maturing in the next year (Notional amount in US dollars 000's) 5,800 7,050
Maturing between one and two years (Notional amount in US dollars 000's) 2,800 5,800
Maturing between two and three years (Notional amount in US dollars 000's) 800 1,900
Notional amount (US Dollars 000's) 9,400 14,750
20. Cash, cash equivalents and short-term investments
Cash and cash equivalents comprise cash and short-term deposits held by Group
companies. Short-term investments comprise of bank deposits, held with major
UK financial institutions, with notice periods greater than three months but
less than six months. The carrying amount of these assets approximates to
their fair value.
2023 2022
£000 £000
Short-term investments 110 1,828
Cash and cash equivalents 10,539 11,739
Cash, cash equivalents and short-term investments 10,649 13,567
21. Lease Liabilities
At 31 December the Group had lease liabilities with maturities as follows:
2023 2022
£000 £000
Less than one year 33 35
Current lease liabilities 33 35
Between one and five years 46 17
Non-current lease liabilities 46 17
Lease Liabilities 79 52
22. Trade and other payables
2023 2022
£000 £000
Trade payables 2,033 2,698
Taxes and social security costs 132 169
Other payables 104 112
Accruals 1,777 1,004
Trade and other payables 4,046 3,983
There is no interest payable on trade payables and no security against
outstanding balances.
23. Share capital and share premium
The authorised share capital is made up of:
Number £000
Ordinary shares of 23p each 86,956,521 20,000
'A' Shares of 99p each 1,859,672 1,841
Authorised share capital 21,841
The allotted, called up and fully paid share capital is made up of Ordinary
shares of 23p each as follows:
Share capital Share premium Total
Note Number £000 £000 £000
As at 1 January 2022 23,676,181 5,446 11,547 16,993
Exercise of share options 26 177,338 40 255 295
Issue of shares to JSOP 25 600,000 138 3,132 3,270
As at 31 December 2022 24,453,519 5,624 14,934 20,558
Exercise of share options 26 50,000 12 113 125
Cancellation of Tender Offer Shares 24 (4,000,000) (920) - (920)
Cancellation of Treasury Shares 24 (440,388) (101) - (101)
As at 31 December 2023 20,063,131 4,615 15,047 19,662
The company held shares in treasury, which were cancelled in the year, as
follows:
Number £000
As at 1 January 2022 and 31 December 2022 440,388 1,189
Cancellation of Treasury Shares (440,388) (1,189)
As at 31 December 2023 - -
The Anpario plc Employees' Share Trust holds shares in relation to the Joint
Share Ownership Plan as follows:
Number
As at 1 January 2022 2,800,000
Purchase of shares 600,000
As at 31 December 2022 and 31 December 2023 3,400,000
24. Capital redemption reserve
Note £000
As at 1 January 2022 and 31 December 2022 -
Cancellation of Tender Offer Shares 23 920
Cancellation of Treasury Shares 23 101
As at 31 December 2023 1,021
The shares acquired under the tender offer were immediately cancelled,
alongside and at the same time as the shares previously held in Treasury. The
capital redemption reserve represents the cumulative par value of all shares
bought back and cancelled, less the associated transaction costs and stamp
duty. The capital redemption reserve is not distributable.
25. Other reserves
Treasury Joint Share Ownership Plan Merger Share-based Cashflow Translation reserve Total
shares
reserve
payment
hedge
reserve
reserve
Note £000 £000 £000 £000 £000 £000 £000
As at 1 January 2022 1,189 7,840 (228) (2,281) (61) 329 6,788
Joint-share ownership plan 23 - 3,270 - - - - 3,270
Share-based payment charge 26 - - - (183) - - (183)
Share-based payment tax adjustments - - - 71 - - 71
Movement in fair value (net of tax) 19 - - - - 902 - 902
Currency translation differences - - - - - (387) (387)
As at 31 December 2022 1,189 11,110 (228) (2,393) 841 (58) 10,461
Cancellation of treasury shares 23 (1,189) - - - - - (1,189)
Share-based payment charge 26 - - - (284) - - (284)
Share-based payment tax adjustments - - - 90 - - 90
Movement in fair value (net of tax) 19 - - - - (722) - (722)
Currency translation differences - - - - - 221 221
As at 31 December 2023 - 11,110 (228) (2,587) 119 163 8,577
The nature and purpose of other reserves' items are disclosed in note 2.18.
26. Share-based payments
The Group operates, or has operated previously, a number of equity-settled
share based remuneration schemes for employees. Including the following:
Enterprise Management Incentive ("EMI") scheme; Save As You Earn ("SAYE")
scheme; Company Share Option Plan ("CSOP") and an unapproved scheme. These
schemes are subject to only one vesting condition being that the individual
remains an employee of the Group for a period of either 3 or 5 years.
Movements in the number of share options outstanding are as follows:
Number Weighted average Number Weighted average
of options
exercise price (p)
of options
exercise price (p)
2023 2023 2022 2022
Outstanding at 1 January 470,018 339 562,842 254
Granted during the year - - 84,514 565
Lapsed during the year (20,545) 382 - 334
Exercised during the year (50,000) 248 (177,338) 308
Outstanding at 31 December 399,473 348 470,018 339
Exercisable at 31 December 234,000 284 264,000 269
Share options outstanding at the end of the year have the following expiry
dates and weighted average exercise prices:
Number Weighted average Number Weighted average
of options
exercise price (p)
of options
exercise price (p)
2023 2023 2022 2022
2024 50,000 242 100,000 245
2025 84,800 290 84,800 290
2026 62,200 239 62,200 239
2027 76,675 323 91,504 323
2028 47,000 438 47,000 438
2032 78,798 535 84,514 535
Total outstanding share options 399,473 348 470,018 339
The range of exercise prices of outstanding share options at the year end was
238p to 565p (2022: 238p to 565p) and their weighted average remaining
contractual life was 3.5 years (2022: 4.2 years).
The fair value of services received in return for share options granted and
the shares which have been issued into the joint beneficial ownership of the
participating Executive Directors and the Trustee of The Anpario plc
Employees' Share Trust is calculated based on the Black-Scholes valuation
model. The expense is apportioned over the vesting period and is based on the
number of financial instruments which are expected to vest and the fair value
of those financial instruments at the date of the grant.
The charge for the year in respect of share options granted and associated
expenses amounts to £304,000 (2022: £213,000) of which a charge of £20,000
(2022: £30,000) relates to professional fees.
27. Related party
transactions
The Group considers the Directors to be the key management personnel. There
were no transactions within the year in which the Directors had any interest.
The Remuneration Committee Report contains details of the Board emoluments.
None of the Group's shareholders are deemed to have control or significant
influence and therefore are not classified as related parties for the purposes
of this note.
28. Capital commitments
The Group had authorised capital commitments as at 31 December as follows:
2023 2022
£000 £000
Property, plant and equipment - 140
Capital commitments - 140
Company statement of financial position
as at 31 December 2023
restated(1)
2023 2022
Note £000 £000
Intangible assets 33 10,127 10,855
Property, plant and equipment 34 4,615 4,854
Right of use assets 29 26
Investment in subsidiaries 35 11,353 11,353
Derivative financial instruments 19 253 153
Non-current assets 26,377 27,241
Inventories 37 3,608 5,315
Trade and other receivables 38 8,523 10,845
Derivative financial instruments 19 67 21
Current income tax assets 186 971
Short-term investments 110 1,828
Cash and cash equivalents 6,158 8,790
Cash, cash equivalents and short-term investments 6,268 10,618
Current assets 18,652 27,770
Total assets 45,029 55,011
Lease liabilities (4) 1
Derivative financial instruments 19 (46) (825)
Deferred tax liabilities 36 (1,761) (1,576)
Non-current liabilities (1,811) (2,400)
Trade and other payables 39 (7,285) (7,496)
Lease liabilities (27) (27)
Derivative financial instruments 19 (377) (638)
Current income tax liabilities - -
Current liabilities (7,689) (8,161)
Total liabilities (9,500) (10,561)
Net assets 35,529 44,450
Share capital 40 4,615 5,624
Share premium 15,047 14,934
Capital redemption reserve 1,021 -
Other reserves 41 (6,393) (8,498)
Retained earnings 21,239 32,390
Total equity 35,529 44,450
1 The prior year has been restated to reflect an adjustment to the computation
of the deferred tax liability between the finalisation of the accounts and the
submission of the tax computation for the Company. See note 36 for more
details.
The Company has elected to take the exemption under Section 408 of the
Companies Act 2006 to not present the Parent Company income statement. The
profit for the Parent Company for the year was £1,048,000 (2022: £857,000).
The financial statements were approved by the Board and authorised for issue
on 20 March 2024.
Richard Edwards Marc Wilson
Chief Executive Officer Group Finance Director
Company Number: 03345857
Company statement of changes in equity
for the year ended 31 December 2023
Share Share Capital redemption reserve Other restated(1) Total
capital
premium
reserves
Retained earnings
equity
Note £000 £000 £000 £000 £000 £000
Balance at 1 Jan 2022 5,446 11,547 - (4,438) 33,719 46,274
Profit for the period - - - - 857 857
Cash flow hedge reserve - - - (902) - (902)
Total comprehensive loss for the year - - - (902) 857 (45)
Issue of share capital 23 178 3,387 - - - 3,565
Purchase of treasury shares - - - - - -
Joint-share ownership plan 26 - - - (3,270) - (3,270)
Share-based payment adjustments 26 - - - 183 - 183
Deferred tax regarding share-based payments - - - (71) - (71)
Final dividend relating to 2021 - - - - (1,512) (1,512)
Interim dividend relating to 2022 11 - - - - (674) (674)
Transactions with owners 178 3,387 - (3,158) (2,186) (1,779)
Balance at 31 Dec 2022 - restated(1) 5,624 14,934 - (8,498) 32,390 44,450
Profit for the period - - - - 1,048 1,048
Cash flow hedge reserve - - - 722 - 722
Total comprehensive income for the year - - - 722 1,048 1,770
Issue of share capital 23 12 113 - - - 125
Purchase and Cancellation of Tender Offer shares 23 (920) - 920 - (9,248) (9,248)
Cancellation of treasury shares 23 (101) - 101 1,189 (1,189) -
Share-based payment adjustments 26 - - - 284 - 284
Deferred tax regarding share-based payments - - - (90) - (90)
Final dividend relating to 2022 11 - - - - (1,228) (1,228)
Interim dividend relating to 2023 11 - - - - (534) (534)
Transactions with owners (1,009) 113 1,021 1,383 (12,199) (10,691)
Balance at 31 Dec 2023 4,615 15,047 1,021 (6,393) 21,239 35,529
1 The prior year has been restated to reflect an adjustment to the computation
of the deferred tax liability between the finalisation of the accounts and the
submission of the tax computation for the Company. See note 36 for more
details.
29. Significant accounting policies
Please refer to note 1 for full details of the Company's incorporation,
registered office, operations and principal activity.
The separate financial statements of the Company are presented as required by
the Companies Act 2006. The Company meets the definition of a qualifying
entity under FRS 101 (Financial Reporting Standard 101) issued by the
Financial Reporting Council. The financial statements have therefore been
prepared in accordance with FRS 101 (Financial Reporting Standard 101)
'Reduced Disclosure Framework' as issued by the Financial Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the disclosure
exemptions available under that Standard in relation to share-based payments,
financial instruments, capital management, presentation of comparative
information in respect of certain assets, presentation of a cash flow
statement and certain related party transactions. Where required, equivalent
disclosures are given in the Group financial statements.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies, and critical accounting judgements and key
sources of estimation uncertainty adopted are the same as those set out in
note 2 to the Group financial statements except as noted below. These have
been applied consistently throughout the period and the preceding period.
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for
impairment.
Receivables from Subsidiary undertakings
The Company holds intercompany receivables with subsidiary undertakings
subject to terms of less than one year. If a significant change in credit risk
occurs following initial recognition then an impairment assessment is carried
out. The Directors assess periodically and at each period end whether there
has been a significant increase in credit risk. Where there has been a
significant increase in credit risk an impairment assessment is carried out.
30. Profit for the period
The auditor's remuneration for audit and other services is disclosed within
note 5 to the Group financial statements.
Dividends declared and paid during the financial period are disclosed in note
11 to the Group financial statements.
31. Employment costs
2023 2022
Note £000 £000
Wages and salaries 3,631 3,292
Social security costs 363 419
Other pension costs 222 265
Share-based payment charges 26 304 213
Employment costs 4,520 4,189
Employment costs stated above includes Director's remuneration. The key
management of the Group is deemed to be the Board of Directors who have
authority and responsibility for planning and controlling all significant
activities of the Group. Director's remuneration details can be found in the
Remuneration Committee Report.
32. Number of employees
The average monthly number of employees, including Directors, during the year
was:
2023 2022
£000 £000
Directors 5 5
Production 26 33
Administration 15 16
Sales and Technical 34 32
Average headcount 80 86
33. Intangible assets
Goodwill Brands and Customer relationships Patents, trademarks Development costs Software Total
developed
and registrations
and Licenses
products
£000 £000 £000 £000 £000 £000 £000
Cost
As at 31 December 2022 5,490 4,677 559 1,915 1,154 943 14,738
Additions - 50 - 153 259 4 466
Reclassifications - 529 - - (529) - -
Disposals - - - (1,051) (399) (22) (1,472)
As at 31 December 2023 5,490 5,256 559 1,017 485 925 13,732
Accumulated amortisation
As at 31 December 2022 - 1,229 559 1,263 - 832 3,883
Charge for the year - 362 - 227 - 64 653
Impairment provision - - - - 399 - 399
Disposals - - - (909) (399) (22) (1,330)
As at 31 December 2023 - 1,591 559 581 - 874 3,605
Net book value
As at 31 December 2022 5,490 3,448 - 652 1,154 111 10,855
As at 31 December 2023 5,490 3,665 - 436 485 51 10,127
More information about Goodwill can be found in note 13 to the financial
statements.
34. Property, plant and equipment
Land and Plant Fixtures, fittings and equipment Assets in the course of construction Total
buildings
and machinery
£000 £000 £000 £000 £000
Cost
As at 31 December 2022 2,251 5,017 337 48 7,653
Additions 2 11 6 252 271
Transfer of assets in construction - 282 9 (291) -
Disposals - (67) (37) (9) (113)
As at 31 December 2023 2,253 5,243 315 - 7,811
Accumulated depreciation
As at 31 December 2022 350 2,187 262 - 2,799
Charge for the year 51 414 34 - 499
Disposals - (65) (37) - (102)
As at 31 December 2023 401 2,536 259 - 3,196
Net book value
As at 31 December 2022 1,901 2,830 75 48 4,854
As at 31 December 2023 1,852 2,707 56 - 4,615
Held within land and buildings is an amount of £500,000 (2022: £500,000) in
respect of non-depreciable land.
35. Investment in subsidiaries
Unlisted
investments
£000
Cost
As at 1 December 2022 14,812
Investment in Subsidiaries 18
As at 31 December 2022 and 31 December 2023 14,830
Provisions for diminution in value
As at 1 January 2022 2,616
Provisions made in the year 861
As at 31 December 2022 and 31 December 2023 3,477
Net book value
As at 1 January 2022 12,196
As at 31 December 2022 and 31 December 2023 11,353
In the prior year, following an impairment review it was determined that a
provision for diminution of value of £861,000 was required in relation to the
investment in Anpario Saúde e Nutrição Animal Ltda to reflect the fair
value of the investment. Last year, investment balances in dormant
subsidiaries that no longer feature as part of the Group strategy were written
off, these totalled £7,000 and relate to Anpario Turkey Hayvan Sağlığı ve
Yem Katkıları İthalat İhracat Sanayi ve Ticaret Anonim Şirketi.
Total investments in Subsidiaries in the year were £nil (2022: £18,000). The
prior year investment relates to the establishment of Anpario (Vietnam)
Company Limited.
Full list of investments
The Group holds share capital in the following Companies which are accounted
for as Subsidiaries, all of which have a principal activity of Distribution
Services and the Group holds 100% of the Ordinary Shares.
Country of registration
or incorporation
Directly held
Anpario Pty Ltd
Level 1, 286 High Street, Penrith 2750 Australia
Anpario Saúde e Nutrição Animal Ltda
Rua Brigadeiro Henrique Fontenelle, 745 - room 4, Parque São Domingos, São Brazil
Paulo, 05125-000
Anpario (Shanghai) Biotech Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, Shanghai China
Anpario GmbH
c/o Startplatz, IM Mediapark 5, 50670 Cologne Germany
Anpario (Biotech) Limited
6th Floor, South Bank House, Barrow Street, Dublin 4. Ireland
PT. Anpario Biotech Indonesia
Gedung 18 Office Park Iantai Mezz- unit F2, Jl. , TB Simatupang Kav. 18, Indonesia
Jakarta 12520
Anpario Malaysia Sdn. Bhd.
Real Time Corporate Services Sdn. Bhd. Unit C-12-4, Level 12, Block C, Megan Malaysia
Avenue II, 12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur
Anpario Biotech Malaysia Sdn. Bhd
Real Time Corporate Services Sdn. Bhd. Unit C-12-4, Level 12, Block C, Megan Malaysia
Avenue II, 12 Jalan Yap Kwan Seng, 50450 Kuala Lumpur
Anpario Latinoamerica SA de CV
Av. Technologico Sur # 134 cas 4, Colonia Moderna, CP 76030, Queretaro Mexico
Anpario (Thailand) Ltd
65/152 Chamnan Phenjati Building Floor 18, Rama 9 Road, Huaykwang Thailand
Sub-district, Huaykwang District, Bangkok 10310
Anpario Turkey Hayvan Sağlığı ve Yem Katkıları İthalat İhracat Sanayi
ve Ticaret Anonim Şirketi
Barbaros Mahallesi Halk Cad. Palladium Residence, (A Blok) Apt. No: 8 A/3 Turkey
Ataşehir/İstanbul.
Anpario Inc
2 W. Washington Street, Suite 400, Greenville, SC 29601 US
Anpario NZ Limited
Alliott NZ LTD, Level 2, 142 Broadway, New Zealand
Newmarket, Auckland, 1023, NZ
Anpario (Vietnam) Company Limited
No.8, Lane 265 Chien Thang Street, Vietnam
Van Quan Residential Area,
Van Quan Ward, Ha Dong District,
Hanoi, Vietnam.
Optivite International Limited - Company Number 02346087*
Agil Limited**
Anpario UK Limited**
Aquatice Limited**
Kiotech Limited**
Kiotechagil Limited**
Meriden Animal Health Limited**
Orego-Stim Limited**
Optivite Limited**
Unit 5 Manton Wood Enterprise Park, Worksop, Nottinghamshire, S80 2RS United Kingdom
Indirectly held
Meriden (Shanghai) Animal Health Co. , Ltd.
Room 703, No.8 Dong An Road, Xu Hui District, Shanghai China
Optivite Latinoamericana SA de CV**
20 Boulevard de la Industria, Cuautitlan-Izcalli, 54716 Mexico
Optivite SA (Proprietary) Limited
PO Box 578, Cape Town 8000 South Africa
The Group has no associates or joint-ventures.
* Companies where the Directors have taken advantage of the exemption from
having an audit of the entities' individual financial statements for the year
ended 31 December 2023 in accordance with Section 479A of The Companies Act
2006.
** Dormant companies
36. Deferred tax
2023 2022
£000 £000
As at 1 January 1,576 1,962
Income statement credit (124) (184)
Deferred tax charged/(credited) directly to equity 309 (202)
As at 31 December 1,761 1,576
Accelerated Fair value Cashflow Losses Other timing Total
tax allowances
gains
hedge
differences
£000 £000 £000 £000 £000 £000
As at 1 January 2022 1,444 805 15 - (302) 1,962
Income statement charge/(credit) (13) (25) - (148) 2 (184)
Deferred tax (credited)/charged directly to equity - - (273) (94) 165 (202)
As at 31 December 2022 1,431 780 (258) (242) (135) 1,576
Income statement (credit)/charge (142) 108 - (104) 14 (124)
Deferred tax charged directly to equity - - 219 - 90 309
As at 31 December 2023 1,289 888 (39) (346) (31) 1,761
2023 2022
£000 £000
Deferred income tax asset - -
Deferred income tax liability 1,761 1,576
Net deferred income tax liability 1,761 1,576
Following the approval of the financial statements in the previous year
further work was done as part of the finalisation and submission of the tax
computation for the company. This work identified matters which lead to the
deferred tax liability being reduced by £148,000 as a result of revisions to
the calculation of capital allowances and research and development tax credit.
These matters could have been identified at the time the tax provision was
calculated for inclusion in the statutory accounts if the finalisation of the
tax computations had occurred at this time. The amount was not material in the
prior year but as the amount is material to the reported profit for the period
ended 31 December 2023 the correction to the prior year deferred tax has been
reported in the prior year results rather than as an adjustment in the current
year. The impact of the adjustment is to increase the reported profit for the
period ended 31 December 2022 included in the statement of changes in equity
by £148,000 and subsequently increase the closing retained earnings at 31
December 2022 reported in the statement of changes in equity and the statement
of financial position by the same amount. The deferred tax liability in the
statement of financial position at 31 December 2022 has been reduced by
£148,000.
37. Inventories
2023 2022
£000 £000
Raw materials and consumables 3,064 4,664
Finished goods and goods for resale 544 651
Inventory 3,608 5,315
38. Trade and other receivables
2023 2022
£000 £000
Trade receivables - gross 3,860 3,958
Less: expected credit losses (282) (149)
Trade receivables - net 3,578 3,809
Receivables from Subsidiary undertakings 4,364 6,479
Taxes 18 56
Other receivables 1 2
Prepayments 562 499
Total trade and other receivables 8,523 10,845
No interest is charged on trade receivables if balances are paid in full and
to terms, there has been no interest charged in the current or previous
financial year. There is no interest charged on receivables from subsidiary
undertakings and payment is expected within terms of less than one year. There
is no security against outstanding balances.
The Group applies the simplified approach to provisioning for expected credit
losses prescribed by IFRS 9, which permits the use of the lifetime expected
loss provisioning for all trade receivables. More information about how ECL is
calculated is contained in note 18 to the Group financial statements.
Credit risk related to receivables from subsidiary undertakings are
individually assessed based on an assessment of changes in credit risk and
there was no impairment provision as at 31 December 2023 (2022: £nil).
The movements in expected credit losses under IFRS 9 are as follows:
Collectively Individually Total
assessed
assessed
£000 £000 £000
As at 1 January 2022 45 121 166
Provisions for receivables created - 117 117
Provisions for receivables released (13) - (13)
Amounts written off as unrecoverable - (31) (31)
Amounts recovered during the year - (90) (90)
As at 31 December 2022 32 117 149
Provisions for receivables created 31 145 176
Amounts recovered during the year - (43) (43)
As at 31 December 2023 63 219 282
39. Trade and other payables
2023 2022
£000 £000
Trade payables 1,982 2,620
Amounts due to subsidiary undertakings 4,224 4,202
Taxes and social security costs 100 127
Other payables 47 44
Accruals and deferred income 932 503
Trade and other payables 7,285 7,496
There is no interest payable on trade payables or amounts due to subsidiary
undertakings and no security against outstanding balances.
40. Share capital
The movements in share capital are disclosed in note 23 to the Group financial
statements.
41. Other reserves
2023 2022
£000 £000
Treasury shares - 1,189
Joint Share Ownership Plan 11,110 11,110
Merger reserve (228) (228)
Unrealised reserve (2,021) (2,021)
Share-based payment reserve (2,587) (2,393)
Cash flow hedge reserve 119 841
Other reserves 6,393 8,498
The nature and purpose of other reserves' items are disclosed in note 2.18 to
the Group financial statements.
A reconciliation of each component of other reserves that has a movement is
shown in the note 24 to the Group financial statements.
42. Related party transactions
Transactions between the Company and its subsidiaries are on an arm's length
basis or in accordance with local transfer pricing regulations.
The following amounts were outstanding at the reporting date:
2023 2022
Note £000 £000
Amounts owed by Subsidiaries 38 4,364 6,479
Amounts owed to Subsidiaries 39 4,224 4,202
The amounts outstanding are unsecured and will be settled in cash. No
guarantees have been given or received. No provisions have been made for
doubtful debts in respect of the amounts owed by related parties.
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